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

Nebraska Rooftop Changes Hands
The Gregg Young Automotive Group has sold its second dealership to Janssen Auto Group, both in Plattsmouth, Neb.
Read More →
Penske Auto Group Deal a Record
The deal to take the dealership and transportation services company private sets a new pace for industry buy-sell transactions.
Read More →
War Toll a Damper on Used Auto Prices
Cox Automotive found wholesale depreciation to be elevated in September amid high fuel prices and this year's unusual hurricane season.
Read More →
Bridge the Maintenance Gap
With many drivers missing recommended maintenance, service departments offering transparency and efficiency have a better chance of reaching financially strained consumers.
Read More →
California Store Has New Owner
The longtime dealership in the northern part of the state is known for robust fleet sales and has served the state capital for 115 years.
Read More →
BMW Plant Pursues Cleaner Energy
BMW Group Plant Leipzig has utilized hydrogen to help power its production since 2013, but a new pipeline is planned to take it to another level.
Read More →
Auto Affordability Inches Up
The latest Cox Automotive and Moody’s Analytics index shows a slight increase in new-vehicle affordability despite high prices.
Read More →
Ohio Auto Group Under New Ownership
After 79 years with the Schluter family, Mansfield Auto Group has been acquired by Missouri-based Clement Auto Group.
Read More →
RV Group Expands Carolina Footprint
Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.
Read More →
Agent Acumen
An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.
Read More →