L.A. Auto Show is bigger; Chrysler is too, says its CEO
On a day when General Motors Co. was expected to re-list its shares on the stock market, the top executive at Chrysler Group was watching and thinking about the timing of his company’s reemergence as a public company. He liked what he was seeing.
“What’s happening with the GM offering only makes me feel better,” said Sergio Marchionne. “The pricing is good, and the fact that the market likes it is good.”
Marchionne is in Los Angeles to attend the Los Angeles Auto Show, which opened its industry exhibitions Wednesday at the Los Angeles Convention Center. The show is open to the public beginning Friday and will run through Nov. 28, including Thanksgiving Day.
Marchionne says GM’s successful return to the equity market provides a road map to recapitalize Chrysler, which still owes billions of dollars to the federal government and is partially owned by taxpayers. Both GM and Chrysler underwent massive bankruptcy restructurings during the recession last year and were bailed out by the government.
“We need to replace the U.S. government’s role in this company,” he said. “The way in which the GM offering has performed so far will open up the road for us.”
Marchionne’s comments came Tuesday night as he toured the new Motor Village of Los Angeles, a Chrysler dealership that will be one of the first stores to handle Fiat sales following a 27-year absence by the Italian brand in the United States.
Marchionne’s primary job is being Fiat’s chief executive. Marchionne became chief executive of Chrysler after Fiat took over management of the Auburn Hills, Mich., carmaker when it emerged from bankruptcy last year. Between Chrysler and Fiat, Marchionne will be displaying nine new and updated vehicles at the auto show, which will be bigger this year, thanks to a rebound in the auto industry. Over the next two days, auto companies will offer up more than 20 world debuts of new vehicles and another 30 North American introductions.
The vehicles Marchionne will have at the show include:
Fiat 500: A tiny, fuel-sipping compact, it goes on sale next year and is modified from the European version for the North American market and marks the Italian brand’s return to the U.S. Fiat hopes to turn the vehicle into a European style statement.
Dodge Durango: This is a three-row SUV that Chrysler has tuned for performance by giving it a 50-50 weight distribution and making the platform 25% stiffer than its predecessor.
Other new and updated models include the Dodge Charger, Dodge Journey, Dodge Grand Caravan minivan, Dodge Challenger muscle car, Dodge mid-size and Chrysler 200.
“I think we have now turned the corner on product, and that is an important piece of the puzzle,” Marchionne said. “We needed the product to get this machine running again.”
Chrysler is trailing Ford Motor Co. and General Motors Co. in recovering from the deep recession and plunge in auto sales.
Through the first 10 months of this year, sales have risen 16.5% to more than 900,000. That’s better than the 10.6% overall increase for auto sales this year. Analysts point out, however, that Chrysler has survived by selling a larger percentage of its vehicles to car-rental companies and fleet buyers and has lagged in retails sales — the bread and butter of the market.
Marchionne said he expected fleet sales to decline in 2011 but didn’t regret the heavy volume this year. “It was enough to make the machine run.”
Earlier this year, Marchionne said that Chrysler needed to sell about 1.6 million vehicles worldwide to break even. Marchionne said the company had been making steady financial improvement and would come “very close” to breaking even this year.
“We managed to run [the company] better than we thought we could,” he said.
It reported a third-quarter operating profit last week of $239 million, narrowing its net loss to $84 million, its smallest quarterly loss since exiting bankruptcy protection last year. The automaker saw its revenue climb more than 5% to $11 billion, and it is looking to hold an initial public stock offering next year.
Marchionne, the son of Italians who moved to Canada when he was 14, worked as a lawyer and accountant there before moving to Europe to run a couple of Swiss companies. A growing reputation as a restructuring expert landed him a seat on the board of sputtering Fiat. A year later, in 2004, he was chief executive.
