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New Film Reveals the Reality of the Auto Bailout

“Live Another Day” – but at what cost?

by on Sep.12, 2016

Storm clouds over Detroit. At the depth of the recession, two of the three US makers went bankrupt.

The economy was collapsing more rapidly than during the Great Depression, and nowhere was that more apparent than in Detroit, where the Big Three automakers faced the very real prospect of going out of business – destroying a million or more jobs in the process.

Ford Motor Co. was able to survive by mortgaging everything; not only its factories, but even its Blue Oval logo. General Motors and Chrysler didn’t move fast enough to secure equity lines. They had to be salvaged with the help of the largest federally funded bailout in history. It broke precedent and, many would argue, broke the law. The rescue effort may also have saved the economy, according to its proponents.

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Was it good or bad? “It was something in-between,” contends Bill Burke, suggests Bill Burke. He’s a media industry veteran and co-producer of the new documentary, “Live Another Day,” which has received strong praise on the film festival circuit and which will open at theaters nationwide on September 16th.


Government Lost $9.26 Billion Saving Auto Industry

Treasury made more than $2 billion on GMAC deal.

by on Dec.30, 2014

The Treasury exited GM more than four years after the maker's 2009 bankruptcy.

The U.S. government lost less than $10 billion rescuing the auto industry, which was four times less than some estimates.

The Treasury initially estimated the loss would be $44 billion, but revised it to $30 billion in 2009. Under government accounting rules, the U.S. Treasury actually lost $16.56 billion on paper because interest and dividends paid isn’t applied toward the principal owed.

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The government was repaid through a combination of stock sales, partial loan repayments, dividends and interest payments. (more…)

Back From the Abyss: Chrysler 200 Plant Defies Death

Slated to close as Chrysler went bust, Sterling Heights plant now maker’s most modern.

by on Mar.13, 2014

Fiat Chrysler is ready to begin production of the new 2015 Chrysler 200 at the Sterling Heights, Mich. plant it once planned to close.

Fiat Chrysler Automobiles will officially mark the start of production of the 2015 Chrysler 200 with a ceremony Friday at the company’s suburban Detroit Sterling Heights Assembly Plant. It’s the same factory the Detroit maker planned to close after emerging from bankruptcy in 2009 and now, along with the new 200 sedan, has become a critical part of Chrysler’s turnaround.

The maker – now part of the newly merged Fiat Chrysler Automobiles – is betting on the 200 to help it gain a foothold in the huge but highly competitive midsize segment where it will go up against tough competitors like the Ford Fusion and Chevrolet Malibu, as well as such imports as the Nissan Altima, Honda Accord and Toyota’s traditionally best-selling Camry.

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An earlier version of the 200, launched with the help of a widely seen 2011 Super Bowl commercial featuring rapper Eminem, helped gain some traction for the midsize model – and saved the Sterling Heights plant. Chrysler’s bankruptcy plan called for permanently shutting it, any cash from the sale of the property going to the maker’s creditors. (more…)

Chrysler Earnings Quadruple in Q4

Maker Reports $1.8 billion earnings for all of 2014.

by on Jan.29, 2014

The belated launch of the 2014 Jeep Cherokee helped buoy Chrysler's Q4 earnings.

Chrysler Group more than quadrupled its earnings for the final quarter of 2014 — in part due to a huge one-time tax gain, but also due to a surge in U.S. car sales.

The smallest of the domestic makers this morning reported net income of $1.62 billion for the fourth quarter, a figure including a $962 million one-time tax benefit.  Even without that boost Chrysler would have come in 74% ahead of the final quarter of 2012.  For the full year, meanwhile, the maker earned $1.8 billion after excluding one-time gains, a 9% bounce over all of 2012.

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The full-year earnings were Chrysler’s best since it exited Chapter 11 bankruptcy protection in 2009.

“The 2013 year-end financial results reflect the commitment Chrysler Group has made to rapidly refresh our product lineup with vehicles that achieve exacting performance standards,” Sergio Marchionne, CEO of both the Chrysler Group and Fiat SpA, said in a statement.


Fiat Completes Chrysler Takeover

A day late but definitely not a dollar short.

by on Jan.21, 2014

Sergio Marchionne, now chairman of a united Fiat-Chrysler, and Fiat Chairman John Elkan during the Detroit Auto Show.

The news comes a day later than originally promised but after establishing their alliance nearly five years ago, suburban Detroit-based Chrysler Group is now a wholly-owned subsidiary of Fiat SpA.

The partnership began in 2009 when the Italian maker came to the rescue of the bankrupt Chrysler.  Since then, Fiat steadily expanded its stake in the U.S. maker, announcing a deal on January 1st to purchase the remaining shares of Chrysler held by the United Auto Workers Union’s retiree health care trust, known as a VEBA.

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At that time, Fiat had indicated it would complete the takeover by January 20th. But there appears to have been no last-minute hitch, just the fact that “It was a holiday yesterday,” explains Richard Gadeselli, the London-based Fiat spokesman adding that there have been “no changes whatsoever” to the terms announced on New Year’s Day.


Chrysler Gets Creative to Bolster Bottom Line

Automaker renegotiates key loan.

by on Dec.24, 2013

Fiat-Chrysler CEO Sergio Marchionne continues to push off an IPO for the U.S. automaker.

The Chrysler Group has found another way to bolster its bottom line.

The automaker has taken advantage of favorable market conditions to reduce the interest rate on the $2.9 billion term loan that helped it pay off the financial obligations to the U.S. and Canadian governments run up during its post-bankruptcy bailout.

“Under current market conditions, this action reduces the annual interest cost for the term loan by approximately $22 million. The term loan maintains a maturity date of May 24, 2017,” Chrysler said in a statement.

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The loan was negotiated in 2011 and used to repay the federal  and Canadian governments which had loaned Chrysler  a total of $7.6 billion after it emerged from bankruptcy in 2009. Chrysler paid off the $5.9 billion loan from the U.S. Treasury and the $1.7 billion loan from Canadian government six years ahead of schedule to get out from under what Fiat/Chrysler CEO Sergio Marchionne described as onerous terms.


Chrysler Files for IPO

Stock offering follows failure to resolve dispute between Fiat and the UAW.

by on Sep.23, 2013

Fiat/Chrysler CEO Sergio Marchionne returns to the IPO alternative as his dispute with the UAW drags on.

Chrysler Group LLC is filing for an IPO, a step that Sergio Marchione, the CEO of both Chrysler and its Italian ally Fiat, had hoped to avoid.

The move is a step of last resort, the result of an ongoing dispute between Fiat, which owns a majority stake in the U.S. maker, and the union retirement health care trust that holds the remaining 41.5% stake in Chrysler. The two are currently battling in the Delaware courts over the value of the so-called VEBA’s holdings in the once-bankrupt American automaker.

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The specific price, as well as the number of shares to be auctioned off, have yet to be set.  JPMorgan will serve as the investment banker putting together the Initial Public Offering, which will see Chrysler traded publicly for the first time since it entered a “merger of equals” with Germany’s Daimler-Benz in 1998.


Chrysler Delivers Best Earnings in 13 Years

Q1 profit beats all of 2011.

by on Apr.26, 2012

Chrysler is "maintaining its focus," says CEO Sergio Marchionne, after announcing $473 million in profits.

Barely three years after it plunged into bankruptcy, the Chrysler Group is reporting its biggest quarterly profit in 13 years, its $473 million in earnings more than the automaker made for all of last year.

The uptick in earnings reflects the maker’s strong sales for January – March period when demand for Chrysler products rose 39%, handily outpacing the U.S. auto industry as a whole.  But Chrysler also benefited from significant interest savings after having paid off its remaining federal bailout loans.

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“Another positive quarter…is affirmation that the Chrysler team is maintaining its focus,” said Sergio Marchionne, CEO of both Chrysler and Fiat, the Italian automaker that assumed control after the American maker emerged from Chapter 11 protection.

Chrysler’s first-quarter earnings were more than four times the $116 profit posted during the first quarter of 2011 – and the biggest figure since the maker reported a $682 million profit during the third quarter of 1998.

But there are some significant differences between then and now.  In 1998, Chrysler’s product portfolio was largely focused on pickups, SUVs and minivans.  While light trucks are still important to the maker, it is now increasingly focused on passenger cars, such as the full-size Chrysler 300C and midsize 200 sedan, as well as the new Dodge Dart it is preparing to launch.

The introduction of the Dart, which is largely based on the platform of the European Alfa Romeo Giulietta, is a “true melding of Chrysler’s and Fiat’s engineering and styling strengths,” said Marchionne. It is likely to become a major test of the alliance between the makers, Fiat now controlling 58.1% of Chrysler stock and planning to push that to more than 70% in the near to mid-term.

Chrysler’s first-quarter performance was buoyed not only by strong sales but a jump in its average transaction price, or ATP, consumers spending about 5% more per vehicle, at $29,234, according to the data tracking service

“Chrysler gained 2 full percentage points of US market share compared to a year ago, while increasing their transaction prices and lowering inventory turn times significantly –all resulting in a much improved bottom line,” said Jesse Toprak, Vice President of Industry Trends and Insights at, who added that Chrysler should get, “full credit for having the most desirable line up of vehicles that they have ever had in their showrooms.”

For the quarter, Chrysler Group revenues rose 25% to $16.4 billion.

There is significant competition in today’s automotive market but the market also continues on an upswing that, barring another economic meltdown should see overall new vehicle sales reach 14 million for 2012, at least 1 million above 2011’s numbers.  Chrysler is expected to maintain its sales and revenue growth, especially if it can hold onto its current market share, 11.5% compared to 9.4% for all of 2011, analysts forecast.

Also assisting its earnings surge, Chrysler is now paying less to borrow money after getting out from under the terms of its federal bailout.  Having paid off its remaining government loans last May it saved $71 million in interest charges during the first quarter, it revealed.

Chrysler received $12.5 billion in assistance from the government before, during and after its emergence from Chapter 11.  The U.S. Treasury has recouped $11.2 billion of that and has written off the remaining $1.3 billion.

The maker does have a number of challenges ahead.  It has to successfully launch the new Dodge Dart, which not only goes up against traditional compact segment leaders like the Toyota Corolla and Honda Civic, but also new domestic challengers such as the Ford Focus and Chevrolet Cruze.

The first-quarter surge in fuel prices – now near record levels in most U.S. markets – could further weaken demand for the pickups and SUVs that remain a core part of the Chrysler line-up. The automaker has been hoping to offset that with updated designs and advanced powertrains, such as the more fuel-efficient V-6 it will offer in the 2013 Ram 1500 truck.

One of the biggest challenges remains the need to build Chrysler’s presence overseas.  It can no longer count on the North American market, Marchionne readily acknowledges.  The maker is now supplying a number of models to European dealers – though they are being sold there through various Fiat brands.

Meanwhile, Chrysler has a number of offerings on display in Beijing this week at the huge Auto China 2012 auto show.  It marks the return to what is now the world’s biggest automotive market.

Chrysler Stock Offering on Indefinite Hold

“It’s not imminent,” says Marchionne.

by on Mar.07, 2012

The long-awaited Chrysler IPO isn't likely to happen anytime soon, cautions CEO Sergio Marchionne.

Analysts and potential investors who’ve been waiting for a Chrysler stock offering are going to have to keep waiting – possible for quite some time, the maker’s CEO is cautioning.

After Italian automaker Fiat effectively took control of the U.S. maker following its 2009 bankruptcy, Sergio Marchionne signaled he would stage an Initial Public Offering in relatively short order.  The IPO has since been pushed back repeatedly by Marchionne – CEO of both Fiat and Chrysler.

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In a Detroit radio interview, the Canadian-educated executive this week said he will not authorize the stock offering until the time is right.  In fact, he told an Italian newspaper last month, that Chrysler just might skip the IPO entirely.

“It’s not imminent,” Marchionne told Detroit talk station WJR when asked about when Chrysler might take itself public again.


Chrysler Operating Earnings Could Near $2 Billion

Maker likely to report first annual net profit since 1997.

by on Jan.30, 2012

A reason to smile for Chrysler CEO Marchionne?

Borrowing the title of a ‘60s-era counterculture novel, Chrysler executives might say, “Been down so long it looks like up to me,” especially if preliminary estimates hold true on Wednesday.  That’s when the long-troubled U.S. maker plans to report its fourth quarter and full 2011 financial figures which – analysts anticipate – could see as much as $2 billion in full-year operating profits.

That would mark the first time Chrysler will have gone into the black for the full year, on an operating basis, since 1997, just before its ill-fated “merger-of-equals” with German’s Daimler AG.  Significantly, the announcement of any full-year profit would come as a stark contrast to the situation the maker found itself in less than three years ago, when it was forced to file for Chapter 11 bankruptcy protection.

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On a net basis, the maker went $42 million into the red for the first nine months of 2011 – but that figure includes $551 million in second-quarter charges resulting from CEO Sergio Marchionne’s decision to pay off Chrysler’s federal bailout loans years ahead of schedule.  Even with those charges, the smallest of the Detroit makers is expected to land in the black for the full year.