Chrysler’s Marchionne Says IPO of U.S. Automaker Isn’t Likely Before 2012
Chrysler Group LLC, the U.S. automaker controlled by Fiat SpA, needs more time to show strong financial results before holding an initial public offering, the companies’ top executive said.
“We need an additional track record of performance and probably a better equity market than I’m seeing today,” Sergio Marchionne, chief executive officer of both automakers, told reporters today in Toledo, Ohio.
Chrysler needs all of this year before an IPO, and there would be “no benefit” in holding one in 2011, he said.
Marchionne is pushing Chrysler this year to raise its global sales by 32 percent to 2 million vehicles and turn an annual profit of $200 million to $500 million, reported Bloomberg. Chrysler last month posted a first-quarter net profit of $116 million, its first since emerging from bankruptcy in 2009, and global sales during that period increased by 18 percent.
Marchionne’s comments came after President Barack Obama visited the Chrysler plant that builds Jeep Wrangler sport- utility vehicles. The U.S. Treasury and Fiat announced a deal yesterday for the Italian automaker to pay $500 million for the U.S. government’s remaining 6 percent stake in Chrysler.
The Treasury said it will receive an additional $60 million as part of an agreement for Fiat to acquire the government’s rights to buy the United Auto Workers retiree health-care trust fund’s stake in Chrysler. The Canadian government will get $15 million from that part of the transaction, the Treasury said yesterday in a statement.
Buying the U.S. stake will raise Fiat’s holding in Auburn Hills, Michigan-based Chrysler to 52 percent. Marchionne has said he expects to receive an additional 5 percent stake in the fourth quarter in return for developing a fuel-efficient car for Chrysler.
Chrysler wouldn’t need to go forward with an IPO if the trust agreed to sell its stake to Fiat, Marchionne said. While Fiat “technically has the cash” to do a deal with the trust, a Chrysler IPO may be “the easiest way to monetize” the fund’s stake, Marchionne said.
Fiat isn’t in negotiations to acquire the trust’s stake, Marchionne said.
“I expect to work with them to find a way for them to exit at the right time,” he said. “But neither Chrysler nor Fiat is going to be pushed into a position. We’ll do it when it’s ready.”
Marchionne said he’s not sure how the trust could remain an equity partner because it’s “not an investment fund -- they need to satisfy the obligations to the retirees.”
The $500 million that Turin, Italy-based Fiat will pay the U.S. government for its remaining stake puts the value of Chrysler at more than $8 billion, Marchionne said.
Marchionne is talking with the Canadian government about buying its holding in Chrysler.
Canada isn’t “going to get a better deal than I offered Treasury” on a pro-rata basis, he said. “It’s the deal. I have no other deal.”
Canada holds 1.7 percent of Chrysler, Eileen Wunderlich, a company spokeswoman, said in an e-mail last month.
More Industry

Kia Closes Out Summer With a Bang
Its U.S. subsidiary broke multiple records in August, in part due to a surge of demand for hybrids models.
Read More →
Indiana Dealership Changes Hands
A 30-year-old Ford dealership in Indiana has a new owner and will soon be undergoing renovations to meet manufacturer requirements.
Read More →
Texas Dealership No Longer in the Family
The Ford store, a longtime cornerstone of the Houston market, is now part of one of the fastest-growing U.S. auto groups.
Read More →
Genesis Grows California Presence
The Cardinale Automotive Group opened its third Genesis rooftop in the Golden State, Genesis of San Bruno, a stand-alone dealership serving the San Francisco Bay Area.
Read More →
August Auto Sales a Mixed Bag
An early forecast shows strong business despite consumer hurdles, and hybrids are a big piece of their affordability coping strategy.
Read More →
EV Market Humming Along
July sales show steady growth as the segment stabilizes from last year’s artificial surge following pullback of federal support.
Read More →
Auto Loan Delinquency Rates Stabilize
Auto loans are a main driver of nonmortgage consumer debt, but delinquency rates stabilized in the second quarter across all credit risk tiers.
Read More →
EV Sales Recover in Q2
The EV sales roller coaster continues as numbers show improvement, but industry experts predict a year-over-year third-quarter decline and fourth-quarter jump.
Read More →
The Cheapest Hybrids to Fuel
The powertrain is increasing in popularity, in no small part due to its fuel economy. A new report lists the most efficient hybrids on the market.
Read More →
Hybrids and SUVs Gaining Ground
The most recent Kelley Blue Book Brand Watch found that only two nonluxury brands increased in shopper consideration, buoyed by their hybrid and SUV offerings.
Read More →