Sergio Marchionne, head of Fiat Chrysler Automobiles NV, announced that the automaker's headquarters will be based in London.
London was chosen over Italy and the U.S., according to The Telegraph.
"It's clear that group executive functions, the board, my office, some of my functions, need to operate out of London," Marchionne said.
Analysts said that the decision will provide Chrysler tax benefits.
"London is neutral ground," said Ian Fletcher, senior analyst for HIS Automotive. "In Italy, there's been a lot of kicking off about the potential shift from Turin to US. This now puts the group in the middle, it's not taking the central gravity to the US and it's close to enough to feel like a European company."
Fiat is the largest auto manufacturer in Italy, and bought full control of Chrysler in January, Bloomberg reported.
John Wolkonowicz, an independent auto analyst, said London is a sensible choice for HQ because it is a financial capital located in the middle of the company's widely distributed operations. Wolkonowicz said Chrysler will also able to avoid the fallout of choosing Michigan as a base over Turin.
"If you put it in Detroit, you make Fiat people feel bad, and if it's in Turin, you make Chrysler people feel bad," he said. "This way it's neutral ground."
Fiat will still manufacture vehicles in Italy. The company also plans to increase production of upscale Alfa Romeo and Maserati cars there, Bloomberg reported.
Marchionne said that he will keep factories open in Italy.
"It doesn't matter where Marchionne decides to base his office and company's headquarters since we are interested in him making investments in Italy," Ferdinando Uliano, head of the Fim Cisl metalworkers union, said in a phone interview. "Fiat's business plan is good for Italy and ensures full employment. For now, that's it."
The company's new HQ will not be full-scale, The Telegraph reported.
"It'll be a bit more than a name plate in a foyer, but I can't see it being a vast operation," Fletcher said.
