By on February 1, 2012

Today, Chrysler reported its first yearly profit since 1997. It was $183 million net profit on $55 billion net revenue. Not earth shattering as car companies go, but a start: Chrysler wants to turn this into $1.5 billion of net profit in 2012 and $65 billion of revenue. At the same time, Fiat-Chrysler cut its 2012 revenue target to 75 billion, due to a slowing demand for cars in a weakening European economy. Fiat will not pay a dividend for ordinary shares in 2011.

According to Reuters, “Chrysler’s strength offset Fiat Group Automobiles (the grouping of Fiat, Lancia and Alfa Romeo brands) weakness.”

Says Michelle Krebs of Edmunds:

“Chrysler is the surprising comeback kid — again. When Chrysler emerged from bankruptcy, there were plenty of skeptics, but the automaker has proven them wrong.  Since detailing its plan for the future in November 2009, Chrysler has done everything it said it would, creating an impressive recent track record and providing confidence that it will meet its 2012 goals.”

Krebs explains the math behind Chrysler’s good numbers:

“Chrysler’s incentives spend was among the lowest in the fourth quarter of any time in the past two years, and its average transaction price was the highest in at least two years (maybe ever) at $30,603. All of this as vehicle sales soared 35 percent from the 2010 fourth quarter.

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25 Comments on “Chrysler Strength Makes Up for Fiat Weakness...”


  • avatar
    ciddyguy

    That’s good to hear indeed. I would think that Fiat, a Euro branded car isn’t alone in the situation they find themselves in right now with Europe in crisis mode and the EU teetering on brink of bankruptcy or whatever is the case, but not able to sell cars like they did in Europe, has got to hurt just about every car maker to one degree or another there.

    As for Fiat here, I’m seeing more and more 500’s on the roads here in Seattle, literally, like at least once a week now, the latest, a white 500 sport parked on the street that I spotted while walking home from the grocery store, either last night or the night before.

    • 0 avatar
      marjanmm

      They have the oldest model line-up on the Euro market. They seem to have invested everything into saving Chrysler and totally neglected the European brands.
      Chrysler seems to be a success story but something had to give.

    • 0 avatar
      FrankTheCat

      I concurr. I’ve seen quite a lot of 500’s popping up around Albany/Troy. Several in the same day, even.

  • avatar
    Halftruth

    I am not drinking the Kool aid there .. sorry. If things are so “swell” then they should have turned profits pre bailout (and I’m a Chryco guy but come on)..
    More spin?

  • avatar
    Mark MacInnis

    I think its a little premature for a victory lap….must be some corporate Obama love.

    That said, management at Fiat-Chrysler does seem to have a consistent vision and less (apparent) internal conflict than I can remember….Chrysler as an independent, and then under the Daimler wing, seemed always to be conflicted and faction-ridden, with cults of personality having different visions and heading in different directions. These days, Fiat-sler seems to be all on the same page, even if that page seems a bit Jabberwocky or Alice in Wonderland, at times. So, while they have not yet produced any vehicle which would have me thinking about dropping by a dealership for a test drive, at least I am not chuckling and shaking my head at every piece of news coming out of Auburn Hills these days…. OK, except that whole making the Kubang thing at the plant that assembles the GJC….that’s just weird.

  • avatar
    GS650G

    Billions of tax dollars, sold off for a song to FIAT, and we wonder at a small profit.

  • avatar
    vcficus

    I’m a Chrysler fan too (supplier to them, happy they’re still here) but how badly did Daimler and Cerberus mess with their books over the last 15 years? NO (operating) PROFIT SINCE 1997? This company was printing money prior to the Germans coming in and you can’t blame Bob Eaton and Jurgen for everything, can you?

    That’s some creative accounting…

    • 0 avatar
      krhodes1

      The owning company can do darned near anything they please with the books of a wholly-owned subsidiary or division. So not surprising in the least. See Saab under GM for another textbook example.

    • 0 avatar
      windswords

      We still don’t know what happened to the $8-10 billion war chest that Chrysler had accumulated to for product development and continuing operations for when the next recession hit. It would have been the first time the company had a cash cushion during tough times. After Daimler came in the money vanished.

  • avatar
    SLLTTAC

    How does a business that hasn’t made a profit in more than a decade stay alive?

    • 0 avatar
      krhodes1

      Just because you don’t make a profit does not mean you don’t have positive cash flow. There are an awful lot of things on a manufacturing company P&L that do not require writing out a check to someone. Think of the annual depreciation on all those factories, office buildings, and equipment for example. Probably hundreds of millions if not billions right there.

      Accounting is an art, as well as a science. There are MANY right answers to the same set of accounting problems, especially for an international manufacturing organization. Accounting for currency exchange alone can cause huge swings depending on how you choose to do it.

  • avatar
    indi500fan

    IIRC from reading Steve “the rat” Rattner’s book, in 2009 Chrysler was basically a coin flip decision whether to keep it alive. I wouldn’t have bet a quarter on them making any comeback, based on their tumultuous recent history of Daimler, Cerb, and Fiat.

    The folks in the trenches @ Chrysler deserve some real credit for slogging along in the face of such trauma.

  • avatar
    pgcooldad

    Forbes is reporting first profit since 2005.

    • 0 avatar
      windswords

      That’s more accurate because in the early going after Chrysler lost money just after the Daimler so-called “merger” they went into a tailspin and Chrysler had the profits. Of course they didn’t get any credit from the media, just a few of us here (I believe tri shield was won of them) who pointed out that Mopar was turning a profit while Mercedes/Daimler was not.

  • avatar
    hriehl1

    If I could walk away from all my debt and contracts, I’d turn a short-term profit too.

    It is all about product. Jeep is a crown jewel but its heyday has passed with low-efficiency SUVs on the wane. Ram is solid with some conquest opportunities.

    But the Dodge and Chrysler lines, though improved, are still industry laggards. In a relatively flat market with VW, Hyundai/Kia and Nissan on the rise, it has to come out of someone’s hide. It’ll be weaklings like Chrysler. How does the Dart compete with 25-year franchises like Civic, Corolla, Focus, Elantra, et al? The 200 against Camry, Accord, Malibu, Fusion, Sonata? That’s a 5-year uphill battle, even if the product is totally fantastic (which it isn’t, at best it is competitive).

    I’m not liking Chrysler’s long term prospects.

    • 0 avatar
      mjz

      Yes, the Chrysler/Dodge brands sure are “industry laggards”, that must be why sales were up over 81%/29% in January. Other companies would kill to be “lagging” behind like this.

      • 0 avatar
        hriehl1

        You are confusing growth with overall corporate health.

        A huge growth percentage coming from an absolutely dismal earlier sales level points to an encouraging trend, but does not assure health.

    • 0 avatar
      mjz

      hriehl1: You simply don’t know what the hell you are talking about. Jeep’s heyday has passed? All five Jeep models had double digit increases in January. Total Jeep sales were up over 37%. The Grand Cherokee had it’s best January in six years with sales up 40%. Maybe you should check your facts first.

      • 0 avatar
        hriehl1

        You are right, Jeep is looking OK… right now. The GC had a big month, but one must recognize it is riding high with a new design. Talk to me in 3 years when it is at mid-life.

        But project out 10 years… new CAFE standards, higher gas prices, etc. Jeep’s core market proposition… rugged body-on-frame designs is not a growth segment long-term.

    • 0 avatar
      mjz

      The Dart is built on a freaking Alfa Romeo platform and you’re wondering how in the world it could possible compete with a Corolla? This baby isn’t just going to be just “competitive” it’s going to be class-leading.

      • 0 avatar
        hriehl1

        You’re confusing a car’s “quality” (admittedly a fuzzy term) with success in the market.

        There are arguably 10 models superior to a Corolla in the competitive landscape. But the Corolla outsells them all. Why is that? There is much more to market success than just bringing a good product to market; the marketplace graveyard is filled with great products.

        Probably 5% of the buying public read car mags or visit sites like TTAC. If the Dart is “class-leading”, that 5% will know about it.

        Otherwise it is just another car. What is going to get the other 95% of Corolla / Civic / Focus shoppers to even walk into a Dodge dealership? Memories of the Neon? Caliber? Not so much. Huge advertising campaigns? Not so easy when Chrysler is only breaking even and Fiat is in the doldrums.

        Chrysler has a very long row to hoe in a landscaape where competitors have more resources and marketplace presence. Kia, Hyundai, VW and Audi are on-the-rise because they’ve fashioned an image as being hip. Chrysler and Dodge are perceived as old-school rental car brands. You may not like it, but it is largely true.

        This discussion will not resolve for years. I have a soft spot for Chrysler. But an objective look at its long-term business propsects is not a pretty picture.

  • avatar
    hriehl1

    At that profit rate, if your corner pizza parlor sold $1,000,000 in a year, they make $3327.27.

    ‘Nuff said.

    • 0 avatar
      windswords

      Actually, no. The auto business is always feast or famine. Years of just making a slim profit are few. What usually happens is that great swings in money are lost or made. If you were in a deep enough hole, as Chrysler was then your swing to the positive will yield a small profit or small loss. But these swings of the pendulum usually last for a few years. There is nothing short of national disaster (or recession) that will make the pendulum swing back the other way. I expect 1-3 years of profits for Chrysler before losses are recorded. During that time they will post billions of profits. That’s why it’s called a cyclical industry. Fixed costs are high and that’s a bitch when the economy sucks, but it’s an advantage when the economy is booming.

      • 0 avatar
        hriehl1

        Actually, Yes. The numbers don’t lie. Chrysler lives in a competitive space where they’re out-gunned (better product, deeper pockets) by every mainstream competitor.

        Spin it any way you want. When their competitors are feasting, Chrysler is merely treading water (witness their pathetic profit margin). They are demonstrably behind their competitors with nothing in sight (to my eyes) that’ll make them gain significant ground.

        They’re a Dead Man Walking.


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