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Published: Friday, 2/1/2013

Improved Chrysler posts $1.7B profit in ’12

BLADE STAFF AND NEWS REPORTS
The Jeep Wrangler is credited with adding to Chrysler Group LLC's success. The Wrangler is especially popular overseas. The Jeep Wrangler is credited with adding to Chrysler Group LLC's success. The Wrangler is especially popular overseas.
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DETROIT —In just three years, Chrysler has gone from government ward to rising star.

The No. 3 U.S. automaker made $1.7 billion last year thanks to big gains for its much-improved cars and trucks, and it's expecting profits to reach $2.2 billion this year.

It's a big improvement over 2011, when Chrysler earned $138 million. And it's even more remarkable considering that Chrysler was in bankruptcy and living on taxpayer loans just three years ago.

The improving U.S. economy is one reason for Chrysler's success. Auto sales in the United States — where Chrysler sells three out of every four of its vehicles — rose to a five-year high of 14.5 million last year.

But Chrysler rose even faster than average, with its U.S. sales up 21 percent versus 13 percent for the industry.

"There can be no more doubt that our comeback is real," Chrysler CEO Sergio Marchionne told employees in an e-mail sent Wednesday.

Mr. Marchionne praised their efforts and said that based on Chrysler's performance, all eligible salaried and hourly employees will receive a profit-sharing bonus. That will mean a little extra money for Chrysler's approximately 3,800 local employees split among the Toledo Assembly Complex, the Dundee Engine Plant, and the Toledo Machining plant in Perrysburg Township.

Last year qualifying employees received about $1,500. With Chrysler's bigger profits in 2012, this year's payout should be higher. The letter didn't specify the amount employees will receive.

“It’s nice to see Chrysler’s back on their feet," said Dan Henneman, Jeep unit Chairman for the Toledo Assembly Plant. "I’d like to challenge all the naysayers out there who said [the bailout] was a bad investment. It just goes to show what a good workforce we’ve got here."

In addition to increasing its sales volume, Chrysler also made more on every car it sold. Customers paid an average of $29,630 for a Chrysler vehicle last year, up about $1,000 from the year before, according to auto pricing site TrueCar.com.

Revenue increased 20 percent to $65.8 billion last year. Chrysler expects revenue of between $72 billion and $75 billion this year.

It helps that Chrysler has limited exposure to Europe, where falling sales have hurt its competitors, says IHS automotive analyst Mike Wall.

But Chrysler's limited international sales are also a frustration for Mr. Marchionne, who has led Chrysler and its majority owner, Italian automaker Fiat SpA, since Chrysler emerged from bankruptcy in 2009. Chrysler and Fiat recently signed a deal with Chinese automaker Guangzhou to build Jeeps for Chinese buyers, and Mr. Marchionne wants to start production quickly.

“I'm tired of waiting in China,” he said Wednesday in a conference call with analysts and media. “Jeep may be our way back into that market.”

Marchionne hopes to beat his goal of selling 500,000 Chrysler cars and trucks outside North America by 2014. But the company has a ways to go. Chrysler sold just 210,000 vehicles — mostly Jeeps — outside the U.S. last year.

Going forward, Jeep will continue to be key to increasing international sales.

“That continues to be the single largest reliable instrument for international growth that Chrysler has at its disposal we need to continue to leverage it. We need to make it better," Mr. Marchionne said. "I think you’ll be pleasantly surprised with both the Grand Cherokee we just launched and the Liberty successor that will be launched in New York at the auto show this year.”

Chrysler is expected to begin production of the Liberty successor in Toledo on May 23.

International sales of the Jeep brand were up almost 50 percent in 2012, including a 16 percent gain for the Toledo-built Wrangler.

Jeep also figures big into Chrysler Group's goals for U.S. sales growth. For 2013, Mr. Marchionne said the big drivers should be Jeep and Ram.

“I’m now beginning to sound like a broken record, but if I had more Jeeps I’d sell more Jeeps," he said.

One model Chrysler is struggling to build enough of is the Wrangler. Mr. Henneman said the production line cannot be further sped up, but there have been discussions about how to build more Wranglers this year.

"We’re looking at some alternatives right now," he said. "We haven’t come to any conclusions, but we’re looking at some alternvatives to get a little more production."

Chrysler also gave an update on some future products. It confirmed that an Alfa Romeo car will come to the U.S. from Italy later this year, possibly with a Ferrari-designed engine. A new version of the Chrysler 200 midsize sedan is coming in 2014, and a long-awaited new minivan is due in 2015.

The automaker's updated product plan now shows plans to introduce six Fiat models to the North American market in 2015, along with four additional Alfa Romeo models.

Blade business writer Tyrel Linkhorn contributed to this report.



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