The Detroit company cuts losses, predicting net income of at least $200 million this year
POSTED: 1:30 a.m. HST, Feb 1, 2011
DETROIT >> Chrysler was collapsing when Fiat took control of the company just 19 months ago.
Now, under the Italian automaker's detail-driven CEO, Chrysler is on the verge of turning its first quarterly profit since its bankruptcy in 2009.
Chrysler Group LLC yesterday said it dramatically narrowed its losses in the fourth quarter and 2010. And it predicted net income of $200 million to $500 million for 2011.
While Detroit rivals Ford Motor Co. and General Motors Co. are making profits, Chrysler still hasn't posted a quarterly net income since leaving bankruptcy in June 2009. It announced a $199 million loss in the fourth quarter. It also lost $652 million in 2010, although the result was a huge improvement over the staggering $8 billion loss the year before.
Chief Executive Sergio Marchionne has transformed Chrysler by managing its smallest details, even picking the music for company presentations.
As a result, Chrysler's vehicles are starting to look and drive better and its costs are under control.
Marchionne, 58, has brought back the speed and drive that Chrysler once had. He pushed engineers and designers to bring out 16 new or revamped models in the past year, including 11 in the fourth quarter alone.
Last year at this time, many Chrysler, Dodge and Jeep dealers were wondering if they'd even make it through the year. Sales were down and there were few new products on their lots. The company needed a $12.5 billion bailout from the government to survive in 2009.
Of the 16 new or revamped models, five were rebuilt from the ground up in under two years, far faster than the normal three or four years. They include the 300 big sedan, the Jeep Grand Cherokee and Dodge Durango SUVs, Dodge Charger muscle car and the Fiat 500 minicar.
Marchionne allowed engineers to make big changes, even if they added costs, said Doug Verley, chief engineer of the revamped Chrysler 200 midsize car.
Engineers were encouraged to make a case for new technology or designs, something that didn't happen under Chrysler's previous owners. As a result, the 200 has new features such as LED headlights and a quieter engine mounting system, a big improvement in quality that its predecessor, the Chrysler Sebring, didn't have.
Along with quality, Marchionne pushed the 200 to come out faster. He personally approved the car's interior in three days, far faster than the two weeks it took under previous CEOs.
Chrysler must be profitable before its stock can be sold to the public, a goal for the end of this year. The stock sale is important because it will allow the U.S. government to unload its ownership stake in the company, currently at 9 percent, which it got in exchange for the bailout.