Chrysler Group LLC will probably go
public next year, but General Motors Co., can be first to the market with an
initial public offering, Chrysler chief executive officer Sergio Marchionne
“I’m always respectful of the
bigger guy,” Mr. Marchionne told reporters Thursday. He said he has spoken to
GM CEO Ed Whitacre and described him as “itching to go. Let him go.”
Both auto makers are looking to
eliminate or reduce majority ownership positions of large entities.
In Chrysler’s case, its largest
owner is the United Auto Workers health care trust. The Canadian, U.S. and
Ontario governments own 72 per cent of GM.
Both companies were bailed out by
those governments last year after collapsing into Chapter 11 bankruptcy
protection in the United States.
Mr. Marchionne is also CEO of Fiat
SpA , which owns 20 per cent of Chrysler and has management control of the
third-largest Detroit auto maker. He is worried about the European debt crisis
spilling over to the broader European economy and derailing the recovery there.
“We need to watch this very
carefully,” he said before a speech to the St. Francis Xavier University annual
dinner in Toronto. “The danger is that Europe will get left behind. That’s a
Many of the signals being sent
during the current crisis don’t give reason for optimism, he said. “I have
severe concerns about what this will do to the global economic recovery that is
under way, about the fact that Europe could once again be left behind by the
rest of the world as we resume our path towards economic growth,” he said in
Peter Wells, co-director of the
Centre for Automotive Industry Research at Cardiff Business School in Wales,
warned this week that the crisis could spread beyond Europe to emerging
countries that rely on that continent as a market for their exports.
Worries about the future of the
euro “are hardly the conditions to have consumers rushing back into the market
to buy new cars,” he said in a commentary on AutomotiveWorld.com. “In real
terms, the medium-term outlook is worse now than it was even during the depths
of the global financial crisis,” Mr. Wells wrote.
Chrysler posted an operating profit
in the first quarter and increased its market share in April from the level of
a year earlier, when it was heading toward Chapter 11 protection. Fiat owns 20
per cent of the third-largest Detroit auto maker and has held management
control of the company since it emerged from bankruptcy protection last year.
Mr. Marchionne’s Toronto visit came
one day before the company is scheduled to unveil its first major redesign of
the post-bankruptcy era. The redesigned Grand Cherokee sport utility vehicle
will be launched officially Friday at an assembly plant in Detroit.
It is the first of several new or
redesigned vehicles that Fiat and Chrysler are relying on during the next few
years to more than double vehicle sales to 2.8 million annually by 2014 from
1.3 million last year.
A plan for Chrysler unveiled last
year calls for that boost in sales to generate revenue of between $65-billion
(U.S.) and $70-billion by 2014 and permit the company to pay back loans still
outstanding from the Canadian, Ontario and U.S. governments.
But a key worry among analysts is
whether the new vehicles will arrive quickly enough for Mr. Marchionne to meet
the targets he has set for Chrysler. The next one in the pipeline is the Fiat
500. The subcompact is scheduled to arrive late this year, but full-year sales
of the car are not expected to exceed 100,000 in North America.