Chrysler loses $199 million in fourth quarter but sees profit on horizon
Chrysler Group remains the weakest sibling among the Detroit automakers.
Whereas Ford Motor Co. and General Motors Co. have moved into the black, Chrysler lost $199 million in the fourth quarter.
That is still down significantly from the $2.7 billion Chrysler lost in the same period of 2009, when it was emerging from a federal bailout and bankruptcy restructuring and the auto industry was mired in a historic slump.
And Chrysler, now 25% owned by Italian automaker Fiat Group, is just starting to show off its revitalized product line as it tries for a comeback.
Only in recent months have the first of its new vehicles, such as the redesigned Jeep Grand Cherokee, started to reach the market. Many are getting good reviews, and the new models appear to be helping the company’s turnaround.
“The new Chrysler 200 and 300 vehicles are fantastic. If consumers head to the showrooms as they did in the past for the Chrysler 300, Chrysler will have an incredible year,” said Jesse Toprak, an analyst with auto information company TrueCar.com.
But “Chrysler still faces several obstacles on their way to better financial health, including lowering their heavy reliance on SUVs and trucks, launching a successful Fiat dealership network and paying back the costly government loans,” Toprak said Monday.
Chrysler Chief Executive Sergio Marchionne said the company’s restructuring was starting to pay off.
The automaker has “lived up to its promise to launch 16 all-new or significantly refreshed vehicles in the past 12 months. All of these vehicles bear testimony to Chrysler’s rebirth,” he said.
Chrysler is on track to pay down $2.1 billion of the $5.8 billion it owes the government by the end of the year and may retire the entire debt, said Marchionne, who also heads Fiat.
Marchionne has said that he wants to pay off the Treasury Department in full, as well as pay back an additional $1.6 billion owed to the Canadian government, before launching a public offering of Chrysler stock, which he hopes to do by year’s end.
Marchionne wants to use the heft of Chrysler and Fiat to build combined sales to about 6 million worldwide by 2014. They sold 3.5 million vehicles in 2010 and are expected to reach about 4 million this year.
Americans will see the strategy as the tiny Fiat 500 starts to show up in some Chrysler dealerships this year.
“You have to have global scale,” Marchionne said.
Chrysler continues to lose money while the other domestic automakers have recovered from the deep industry downturn of the last two years and are now making money.
The company’s fourth-quarter revenue rose to $10.8 billion from $9.4 billion a year earlier. For the year, Chrysler lost $652 million on sales of $42 billion. The automaker did not provide prior-year figures because of the bankruptcy.
Chrysler said it expected to earn a small profit of $200 million to $500 million this year and that revenue should top $55 billion, up 31% from 2010.
Last week Ford said it earned $6.6 billion in 2010, a 141% increase from $2.7 billion in 2009. Revenue rose 4% to $120.9 billion. From 2006 through 2008, Ford lost $30 billion.
GM, which like Chrysler underwent a government-supported bankruptcy restructuring and bailout in 2009, earned $2 billion in the third quarter of last year and is expected to report a fourth-quarter and full-year profit in the coming weeks.
