By on October 23, 2018

FCA Brampton Assembly Line Challenger & 300 - Image: FCA

It took years, but Fiat Chrysler Automobiles finally unburdened itself from the weight of an unpaid loan by waiting until the government grew tired and gave up. Not that the automaker’s pursuer ever expected to recoup the cash.

It was revealed this week that Canada, which sunk nearly $14 billion into General Motors and Chrysler during the depths of the recession, quietly wrote off a $2.6 billion (CAD) loan made to Chrysler in 2009. It’s not the last bit of money owed to that country’s government by the two automakers, but it is a major outstanding chunk. In its defence, the feds didn’t have a hope in hell of getting the loan repaid, as the company that received it no longer exists.

“After exhausting all potential avenues for recovery, a $1.125 billion US principal plus accrued interest write-off in respect of ‘Old Chrysler’ occurred in March,” John Babcock of Global Affairs Canada told the CBC.

Documents show the money was loaned to Chrysler LLC in March, 2009. The entity that sprung up in the defunct automaker’s wake, Fiat Chrysler Automobiles, did pay back a $1.7 billion loan in 2011. Further plumbing of the country’s finances shows an outstanding $1 billion-plus loan to the “Old GM” administered by Export Development Canada in April of 2009.

In 2015, the country’s government, which purchased GM stock to keep it afloat, sold its remaining 73.4 million shares to Goldman, Sachs & Co.

The revelation of the Chrysler write-off prompted anger among fiscal transparency types north of the border. Like in the U.S., the bailout left taxpayers on the hook for billions, but the picture of who owes what is more opaque in Canada. It’s estimated that Canada lost $3.7 billion on the deal. The U.S. Treasury said in 2014 that the total loss to American taxpayers was $9.26 billion.

News of the write-off would likely have garnered even more acrimony, had the feds not abstained from the same kind of corporate welfare enjoyed by Ford and Toyota in recent years. FCA has, however, seen recent funding from the Ontario government.

Two FCA assembly plants in Ontario crank out the Dodge Grand Caravan and Chrysler Pacifica minivans, as well as the rear-drive Chrysler 300 and Dodge Charger sedans and Dodge Challenger coupe.

[Image: Fiat Chrysler Automobiles]

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26 Comments on “Fiat Chrysler Wriggles Out From Under Past-due Loan by Outwaiting the Government...”

  • avatar

    Not in favor of public tax money for corporations outside of infrastructure, public safety and minimum of government laws and regulations to keep everyone honest.

    • 0 avatar

      I agree with you, Sir. The Canadian and American tax payers took a bath on this one. I thought then and still do now that Chrysler should have been pieced out and sold accordingly. North American companies should have been given first dibs. As it stands today, in my world view – Chrysler has the Ram series, Pacifica, Wrangler, Grand Cherokee/Durango, Challenger/Charger but little else.

      In a utopic view, how grand could it have been to see small start ups take these models and compete? I understand that this was sadly not realistic but a guy can wish…

      • 0 avatar

        “As it stands today, in my world view – Chrysler has the Ram series, Pacifica, Wrangler, Grand Cherokee/Durango, Challenger/Charger but little else.”

        Isn’t that enough? Each vehicle is one of, if not the, best-selling (and most acclaimed) in its class.

        • 0 avatar

          The Wrangler is #1 in its class of 1. The Charger is #1 but it is a fleet queen in a segment that is quickly dying. The Pacifica comes in at #2 and looses out to the vehicle it was supposed to replace. Challenger #2 out of a class of 3. Cherokee #3 and Durango isn’t even in the top 10 in the segment. Ram is also #3.

      • 0 avatar

        Wouldn’t the North American companies have to be interested in buying pieces of Chrysler before getting first dibs? I’m asking because I have not heard any of them expressing any interest in buying Chrysler as a whole, let alone pieces of it.

        Frankly I think it was fortunate that Fiat, an Italian company, was interested in acquiring Chrysler, piecemeal or otherwise.

    • 0 avatar

      Well that’s the new reality with the oligarchy that has since replaced the democratic republic in the US at least. Citizens now underwrite poor leadership and risky behavior so they can fail upwards with nearly zero consequence or come out even wealthier than before.

  • avatar

    It’s been almost 10 years.

    Whether it’s an individual, company, gov entity, whatever, you borrow money, YOU PAY IT BACK.

    Friggin deadbeats.

  • avatar

    Canada should put a FCA tax on all FCA vehicles sold in Canada until they recoup the billion dollars.

  • avatar

    Unfortunately, who do you think pays the tax?

  • avatar

    What? You expect car salesmen to be honest? Like Ford taking government money to rehab the old Michigan Central Station? HAHAHAHAHA….

  • avatar
    SCE to AUX

    FCA’s US sales from 2009-18 mean that the $9.26 billion cost taxpayers about $500 per vehicle sold.

    I guess that’s better than the $1.5 billion in US taxpayer money in the form of tax breaks for ‘rich guys’, right?

    Pick your poison.

  • avatar
    Gardiner Westbound

    “A billion here, a billion there, and pretty soon you’re talking about real money.” – Everett Dirksen

    • 0 avatar

      Or, to give it a Canadian flavour: “What’s a billion?”

      • 0 avatar
        Arthur Dailey

        Always appreciate a good C.D. Howe reference.

        I agree with Lord Black of Crossharbour who wrote repeatedly that instead of ‘loaning’ Chrysler money that the federal government of Canada should have purchased controlling interest in the company.

        With major facilities in Windsor and Brampton. And since closed facilities in Ajax, and Mississauga, Chrysler is a major presence in Canada.

  • avatar

    This article is either poorly researched or a total smear. Because the bailout loan was paid off a long time ago. In record time actually.

  • avatar

    And folks fret about ev subsidies.

  • avatar

    That dude was right.
    It s always Brampton Assembly.

  • avatar

    Something tells me there’s more to the story.

  • avatar

    I toured the plant in Brampton Ontario where Chrysler 300, Chargers and Challengers are now assembled, in 1963 as a kid, when Ramblers were made there. It was a brand-new, state-of-the-art auto plant then and has been making cars through the mergers with Renault, Chrysler, Daimler Benz and now Fiat. Quite a history for one auto assembly plant and still going strong.

  • avatar
    Rick Astley

    If I may quote our august founder, Robert Farago:

    “Even with some pertinent strings, the money will simply enable Detroit to continue its addiction to stupidity, sloth, greed and arrogance.”

    This certainly has not changed in the halls of Chrysler, their bailout on the chassis of the Dart was and is a burden to the taxpayers, they still can’t make a viable product (in terms of design, production and ledger), and they aren’t about to anytime soon.

  • avatar

    I get that there’s an “old” Chrysler and a “new” FCA, but why would the government make the loan to the “old” company knowing it was going (or likely would go) bankrupt? Seems like they should have had better assurances somehow. FCA is clearly making enough money now that they could pay it back (not that I’m expecting them to since it’s technically not their debt, but if the government had’ve kept them on the hook they could’ve got our money back by now).

  • avatar

    Steph how are you calculating losses for the US bailout?

    Obviously if you are counting opportunity costs and underperformance of “Real” value pegged to inflation I could see an argument for a negative return.

    That said in dollars perspective the bailout generated profit (though you can argue very clearly about the profit not being enough to deal with the systemic implications of government involving themselves in the market to that degree).

    The bottom line though if you divorce policy arguments is that the bailout made money for the US, at the expense of other externalities but top to bottom it got more money back than it lent out.

  • avatar

    “The bottom line though if you divorce policy arguments is that the bailout made money for the US, at the expense of other externalities but top to bottom it got more money back than it lent out.”
    Guess who paid that “bailout” money back to the “US”? That’s right, everyone that bought anything from FCA.
    So as usual it’s a big circular joke.
    I recall reading the back pages of the business news during 2007-2011. FCA at least broke even, if not coming out ahead, on the ‘purchase’ of Chrysler. Much of the money coming from USA taxpayers was run through things like “manufacturing employee re-training” or other scams.
    I imagine Lee Ayatollah is getting a big laugh out of the whole thing. He got the taxpayers to kick in billions, in today’s money, to keep Chrysler from going under in 1980. Yeah I know it was a “loan guarantee”. However as part of the package, among other things, Chrysler paid past due bills to suppliers at 7 cents, or less, on the dollar.
    So it goes….
    Corporate welfare ad infinitum.

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