Chrysler hopes its crisis remains in its rearview mirror. After engineering an automotive resurrection by choosing a back-to-basics alliance with Fiat in 2009, the carmaker continues to manufacture its Chrysler brands, including its Dodge Dart, Fiat 500, Jeep Grand Cherokee SRT8, Jeep Wrangler, Town & Country, and Ram 1500 vehicles. Chrysler's trademarked MOPAR (MOtor PARts) automobile parts and service division carries almost 300,000 parts, options, and accessories for vehicle customization. Chrysler Group LLC emerged from a US government backed Chapter 11 bankruptcy in mid-2009. It was first founded by Walter Chrysler and organized as Chrysler Corporation in 1925.
Chrysler started its rebound from Chapter 11 bankruptcy in 2009 once the US Bankruptcy Court gave its approval for the company to merge its assets with those of Fiat. With no cash changing hands, Fiat initially took a 20% equity stake in Chrysler with a plan to increase its share as Chrysler reached certain performance levels. Adhering to this plan, Fiat eventually increased its stake to nearly 62% in mid-2012.
From 2010 to 2011 Chrysler's total sales surged by 31%. The growth was the result of an increase in the demand for its new cars and the overall strengthening of the US automotive market, which recorded an 11% increase in industry vehicle sales for 2011. Revenue from the US spiked by 34% and accounted for nearly 70% of its total revenue for 2011. It attributes about $1.6 billion of its overall revenue increase to more favorable pricing of its 2011 and 2012 model year vehicles.
After suffering three straight years of net losses since the recession, Chrysler finally achieved profitability in 2011, posting net income of $183 million. The positive net income was largely due to the surge in total sales but was offset by the repayment of debt owed to the US government. Another factor that affected its growth in profits was the higher advertising expenses involved in the retail launch of 13 new vehicles in 2011.
Chrysler expects the Fiat partnership to continue to help it reduce development costs (the company already cut billions in operating costs) and to achieve access to the Italian company's small-car expertise and global markets.
The carmaker has already fulfilled its 2010 promise to launch 16 models (at a cost of more than $2 billion) by 2011. At the 2011 Detroit Auto Show, the company unveiled the last of the 16 models -- its Chrysler 300, a big sedan that is considered the company's flagship. The car maker is banking on the 300 to reinvent the image of the Chrysler brand.
Though Chrysler has a penchant for large sedans, it will be making the new Fiat four-cylinder engine and has produced smaller Chrysler-brand cars that are based on Fiat designs and technology. In fact, Chrysler is idling six of its V-6 engines, keeping only one -- the Pentastar V-6, which will power 13 Chrysler models by 2013.
One of the last hold-outs among the top-selling automobile manufacturers to produce a hybrid, Chrysler sold its subsidiary Global Electric Motorcars (GEM) to off-road vehicle maker Polaris in 2011 as interest and investment in the low-emission small vehicle market waned.
Fiat owns almost 62% of the company, and the UAW Retiree Medical Benefits Trust owns the remaining shares. – less