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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 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.


Chrysler Celebrates “Second Chance”

Despite skeptics, maker “dared to dream big,” pays off $7.5 billion in federal loans.

by on May.24, 2011

It's "the end of the beginning," said Marchionne, after announcing Chrysler had completely paid off its government loans.

Despite the “skeptical and patronizing looks” of those who placed a “death sentence on our company,” Chrysler CEO Sergio Marchionne suggested the automaker has proved it is both a viable and competitive player in the global auto industry.

The executive, who also runs Chrysler’s Italian partner, Fiat SpA, tried to maintain a low-key tone Tuesday as he announced the long-troubled American automaker had officially paid back the $7.5 billion it owed the U.S. and Canadian treasuries – six years earlier than it was required to under the terms of the bailout it received in 2009.

But speaking to an overflow audience of reporters, workers and dignitaries at the Sterling Heights Assembly Plant, in suburban Detroit, it was obvious that Marchionne wanted the event viewed as a critical transition point for Chrysler.

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The Canadian-educated executive heaped plenty of praise on the White House, and particularly President Barack Obama, who decided to offer Chrysler a bailout despite significant opposition within his administration.

“We were encouraged by the fact that someone believed in us,” said Marchionne, adding “it happens rarely in life you’re given a second chance.”


Chrysler To Pay Back $7.5 Bil in Government Loans Next Week

No more "Government Motors"?

by on May.19, 2011

Fiat/Chrysler CEO Marchionne.

Chrysler is expected to confirm today it has lined up new financing that will allow it to repay next week the nearly $7 billion in government loans it received as part of its 2009 bankruptcy.

Chrysler CEO Sergio Marchionne has said he had hoped to repay the $5.9 billion owed to the U.S. Treasury and another $1.6 billion provided by Canada before the second anniversary of the maker’s emergence from bankruptcy protection, in June 2009.

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The move will allow Chrysler’s Italian partner, Fiat SpA, to quickly increase its stake in the U.S. maker to 46%, and that is expected to jump to 51% before year’s end.  In fact, Fiat has given recent indications it would like to push its share in the long-troubled Chrysler to as high as 70% and may even skip the planned IPO that would have resumed public trading in Chrysler stock.


Chrysler Reports $84 Mil Net Loss

But results exceed original forecast.

by on Nov.08, 2010

The Fiat 500 will begin rolling into U.S. showrooms by December.

Chrysler Group LLC reported an $84 million net loss for the third quarter of 2010, the only one of the domestic makers to go into the red during the July-September period.

But the maker’s results nonetheless exceeded expectations announced a year ago, in the months after Chrysler emerged from Chapter 11 protection.  And company officials are now projecting an operating profit of $700 million for the full year, up from an earlier outlook of $200 million.

The third-quarter results followed less than a week after Chrysler announced a 37% upturn in October sales, its seventh monthly increase in a row, and the biggest gain of any of the domestic Big Three. (October sales, Click Here.)

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Chrysler said its revenues for the third quarter totaled $11.02 billion, a 5.2% gain.  Excluding the cost of servicing the loans it has received from the U.S. Treasury as part of its 2009 bailout, Chrysler said it would have had a $239 million operating profit for the third quarter.


Lee Iacocca, 450 Other Former Execs Sue Chrysler

Seeking millions in pensions lost during maker’s bankruptcy.

by on Sep.13, 2010

Lee Iacocca kept Chrysler out of bankruptcy in 1979, but his supplemental pension was wiped out by the maker's 2009 trip through Chapter 11.

More than 450 Chrysler executives, among them former chairman Lee Iacocca, filed a class action lawsuit in Wayne County Circuit Court, naming Daimler AG and Cerberus as defendants, claiming they lost millions of dollars in supplemental pensions during the automaker’s bankruptcy.

Sheldon Miller, one of the lawyers representing the executives, said the former Chrysler employees, many of them well-known figures, lost their supplemental pensions during Chrysler’s 20009 bankruptcy.

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A Daimler spokesman said he could not comment on the lawsuit because he had not seen any court documents.

Miller said the supplemental pensions were not transferred to the new Chrysler during the bankruptcy and, “as a result, each of the plaintiffs lost large percentages of their earned retirement pensions.” Overall, roughly $100 million was lost by the executives.