Skip to main content

Fiat and Chrysler CEO Sergio Marchionne

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 says.

"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.

Story continues below advertisement

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 real problem."

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 his speech.

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 "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.

Story continues below advertisement

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.

Report an error Licensing Options
About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.