Chrysler says it lost $3.8 billion between bankruptcy and year-end

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By Peter Whoriskey
Thursday, April 22, 2010

Chrysler, which emerged from bankruptcy last June, reported Wednesday that it lost $3.8 billion through the end of the year but expects its operations to break even in 2010.

General Motors, meanwhile, said that it has fully repaid its loans from the U.S. government.

Administration officials called the announcements a sign that the U.S. automakers rescued with government bailouts were on the rebound.

The Chrysler announcement came in the fullest report of the company's financial standing since the U.S. automaker exited bankruptcy, helped by taxpayer-funded aid from the United States and Canadian governments.

For the first quarter of 2009, the company reported a net loss of $197 million, suggesting that it has largely curtailed its losses from last year. The automaker highlighted figures showing that the core of its business, the selling of cars and trucks, is sound. It had an operating profit of $143 million in the first quarter -- a significant improvement over the end of 2009, when it lost $267 million on its operations.

Chrysler also said its U.S. market share, which had plummeted to as little as 8 percent, rose to 9.1 percent in the first quarter. Chrysler attributed the first-quarter results to cost cutting and sales of the new Ram Heavy Duty pickup truck. Worldwide vehicle sales were 334,000 units for the first quarter of 2010, up from 318,000 in the last quarter of 2009.

"This positive operating result in the first quarter is a concrete indication to our customers, dealers and suppliers that the 2010 targets we have set for ourselves are achievable," chief executive Sergio Marchionne, who also heads Fiat, said in a statement.

Supporters of the bailouts for automakers also cheered news Wednesday that General Motors has repaid its loans to the U.S. government. The U.S. still owns about 60 percent of GM, however, and can't even try to recover the bulk of its investment until the company has an initial public stock offering.

During the depths of the recession, Chrysler came closer to annihilation than any of its rivals. Between 2005 and 2009, its sales had been cut in half and it increasingly had to offer consumers incentives, cutting into profit margins, according to figures from Edmunds.com. Its market share slipped from about 14 percent to 8 percent.

The U.S. government, which has pumped billions into the company, now owns about 10 percent of Chrysler. As part of the bankruptcy proceedings in June, the Italian automaker Fiat took over management of Chrysler.

Fiat owns a 20 percent stake of the company, which could grow to 35 percent if management reaches performance objectives.

Chrysler projects that by 2014 it will have an operating profit of $5 billion and will have repaid its loans from the U.S. Treasury.

As part of the rescue package, the United States won a promise that at least some of Chrysler's success, if it happens, would benefit U.S. workers. Under the financing agreement, Chrysler must either manufacture 40 percent of its U.S. sales volume in the United States, or ensure that its domestic production equals at least 90 percent of its 2008 U.S. production volume.


© 2010 The Washington Post Company

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