Chrysler Gains Momentum

AUBURN HILLS — Chrysler Group LLC is on track to generate $3 billion in operating profit in 2012 thanks to rising vehicle sales in a recovering U.S. auto market, the company's chief executive said Tuesday.

The auto maker should see its global sales reach two million cars and trucks this year, reported The Wall Street Journal, and rise 20 percent to 2.4 million in 2012, Sergio Marchionne said in an interview at the company's headquarters here.

After restructuring in bankruptcy court, Chrysler is able to make money if it sells more than 1.5 million vehicles a year, he said, adding that the break-even point drops to 900,000 cars and trucks in 2012.

"That's what gives us the basis for making $3 billion next year," Mr. Marchionne said.

In the first three quarters of this year, Chrysler made $1.47 billion in operating profit. Year-to-date, the company has reported a net loss of $42 million, in part because it was paying interest on U.S. government loans for much of the year.

An increase in operating profit to $3 billion is in line with the business plans Mr. Marchionne outlined for Chrysler in 2009, when Italy's Fiat SpA took a stake in the auto maker as part of its government-led bankruptcy. General Motors Co., which was also ushered into bankruptcy by the Obama administration, and Ford Motor Co., which turned around on its own, have already seen dramatic rebounds in their bottom lines. For the first three quarters of this year, GM reported $7.7 billion in net income, and Ford $6.6 billion.

Chrysler is benefitting from a far-reaching overhaul of its model line that Mr. Marchionne pushed through in 2010. With improved engines and plusher interiors, its cars and trucks are winning back American consumers. Through November, Chrysler's U.S. vehicle sales had climbed 25 percent to 1.2 million cars and trucks. In November alone, its sales jumped 45 percent from a year earlier.

In 2012, Chrysler will add the Dodge Dart small sedan, a type of vehicle that accounts for a large chunk of the U.S. market and one that Chrysler hasn't offered for about a decade. The Dart and other new or updated models, and expanded overseas business, should drive sales higher next year, Mr. Marchionne said.

Another boost to the bottom line has come from Chrysler's decision to borrow money from a group of banks to pay off the $7.6 billion in loans it received from the U.S. and Canadian governments to fund its operations during its bankruptcy, which ended in 2009. Mr. Marchionne had complained the company was spending too much money on the loans, which carried an interest rate of more than 14 percent. The company spent $1.2 billion in interest payments last year, much of that for the Treasury loans.

For 2010, the auto maker booked operating profit of $763 million and a net loss of $652 million.

Separately, Chrysler officially confirmed Tuesday that it will reopen its Conner Avenue assembly plant in Detroit to start building its Viper sports car, which returns to the auto maker's vehicle portfolio in late 2012. The plant, which had been idled as part of the bankruptcy and then saved by Mr. Marchionne after he decided to revive the Viper, will employ about 150 hourly workers.