DETROIT (AP) — Chrysler, propelled by higher sales of
Jeeps and other revamped cars and trucks, reported its first annual net
income since 1997, capping a pivotal turnaround year that many thought
would never come.
The U.S. automaker, now privately held and
majority owned by Italy’s Fiat SpA, earned $183 million last year,
reversing a $652 million loss in 2010, its first full year out of
bankruptcy protection.
Chrysler expects an even better 2012,
despite a sluggish and uncertain economy. The company, which sells most
of its vehicles in the U.S., predicts it will make about $1.5 billion
this year and increase revenue 18 percent.
"The house is in good
order," CEO Sergio Marchionne said Wednesday. "Now we greet a new year
of high expectations with our heads down, forging ahead."
Chrysler spent much of 2010 designing new vehicles and trying to spruce up an archaic
lineup that wasn’t selling well.
Now
those vehicles are in showrooms, and they’ve sold far better than
expected, especially the Jeep Grand Cherokee SUV. The company’s global
sales climbed 22 percent to1.86 million last year. U.S. sales growth was
even faster, up 26 percent.
As a result, the company brought in
more money. Revenue totaled $55 billion last year, 31 percent higher
than in 2010. The added cash, along with relatively low expenses after
bankruptcy, and savings from combining technology and engineering with
Fiat, helped Chrysler turn itself around.
In fact, last year’s
profit would have been higher — $734 million — if the company hadn’t
refinanced $7.6 billion in loans granted by the U.S. and Canadian
governments. In the second quarter, the company took a $551 million
accounting loss because of the refinancing.
But the refinancing in
May at far lower rates helped save Chrysler about $100 million in
interest expenses last year, and is expected to save $300 million during
a full year.
Chrysler’s profit has created a role reversal of
sorts. When the U.S. government picked Marchionne to take control of
Chrysler after the bankruptcy, Fiat was seen as a savior. Now Fiat,
which owns 58.5 percent of Chrysler, is struggling and may need the U.S.
company’s help to survive economic problems in Europe.
Chrysler
said in a statement that it cut its net debt by nearly half last year to
$2.9 billion. The company’s total cash at the end of 2011 was $9.6
billion.
For the fourth quarter, Chrysler said it made $225 million, compared with a loss of
$199 million.
Despite
the strong performance, Chrysler still faces challenges this year,
especially from strong competition in its main market, the U.S. Although
its U.S. market share rose 1.3 percentage points to 10.7 percent, it
came during a year in which Honda and Toyota dealers ran short of models
because the March earthquake and Tsunami in Japan. The disasters
hampered their factories’ output.
Also, Chrysler’s prime U.S.
competitors, Ford Motor Co. and General Motors Co., are rolling out many
new products this year, as are Korean automakers Hyundai Motor Co. and
Kia Motors America.
Still, U.S. auto sales are expected to rise by
about a million this year, to near 14 million, and Chrysler is expected
to get a share of the increase.
President Barack Obama has been
touting Chrysler’s turnaround in recent appearances ahead of the
November presidential election. Obama cast the deciding vote to save
Chrysler and authorized much of the $12.5 billion in government funding
that bailed out the company. Of the original bailout to Chrysler and its
financial arm, the government said it was repaid all but $1.3 billion.
Chrysler’s
turnaround has helped the U.S. economy. Chrysler now employs 57,200
people, 9,400 more than it did when the company left bankruptcy
protection in 2009. On Thursday, Marchionne is expected to announce more
than 1,000 new hires at the company’s assembly plant in Belvidere, Ill.
Chrysler is expected to add a third shift at the plant, which is making
the Dodge Dart, Chrysler’s first competitive compact car in more than
15 years.
The Dart is likely to help Chrysler boost its sales this
year, and it will give the company a product to attract first-time
buyers who generally stay with a brand if they like their first cars.
Last
year, Chrysler’s top-selling vehicle was the Ram pickup, followed by
the Grand Cherokee. Industry analysts expect pickup sales to slowly
rebound this year as small businesses gain confidence and make
investments. Both vehicles carry high sticker prices and bring big
profits to the company. The starting price of a Grand Cherokee, for
instance, is $27,490, but the SUV can run into the $40,000s when options
are added.
The full-year profit sets the stage for Chrysler to
return to the public stock markets. The company’s other owner, a trust
that pays retiree health care bills for Chrysler’s union retirees, wants
to sell its stake to raise money for the payments. Marchionne says a
stock offering won’t happen until at least next year.
Copyright 2012 The Associated Press.