President Praises Auto Turnaround; Chrysler CEO Says It’s Good To Be Independant
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AUBURN HILLS (WWJ) – As President Obama praises Chrysler for its quick turnaround, the company’s CEO says the future will be much simpler, without government control.
“Toledo, you showed that this was a good investment, betting on America’s workers,” said Mr. Obama, speaking at a Jeep plant.
“All three American automakers are now adding shifts and creating jobs at the greatest rate since the 1990’s.”
Chrysler is moving out of government supervision, after the treasury department agreed to sell its six per cent stake in the company to its parent firm, Fiat, for $560 million. This will give Fiat majority ownership of the Auburn Hills based automaker.
“There’s no doubt Fiat acted as a catalyst for change in Chrysler,” said Marchionne. “But the people who turned around Chrysler are the Chrysler people. There’s a huge difference here.”
Video: WWJ AutoBeat Reporter Jeff Gilbert talks one-on-one with Chrysler CEO Sergio Marchionne.
The CEO of both Chrysler and Fiat sat down with WWJ AutoBeat Reporter Jeff Gilbert for a one-on-one interview at the company’s headquarters. Jeff was the only Detroit based reporter invited to talk with Marchionne, who said he wants to maintain the unique American character of Chrysler, while integrating the Chrysler and Fiat operations.
Marchionne said it’s too early to tell where the joint company will be headquartered.
“For Europeans this is a very thorny issue, as you well know,” he said. “This has been a big topic of discussion on the other side. We need to go through our options very, very carefully, and we need to weigh them and weigh the consequences.”
But they have been able to manage a multicultural operation, Marchionne says, and that will continue.
“I would feel as comfortable here as I would on the other side. I spend a lot of time traveling. This is a big place. We have operations in a number of countries. Once you start running these businesses, where you’re effectively located doesn’t matter.”
The deal will also give Fiat the option to buy the 47 per cent of Chrysler currently owned by the UAW retiree trust fund, or VEBA. Marchionne couldn’t say how much, if any, of that stake Fiat would purchase. He admitted that this could mean that Chrysler won’t launch an Initial Public Offering of stock, but said nothing’s been decided at this point.
This comes just a week before Chrysler celebrates the second anniversary of its emergence from bankruptcy.
“It’s safe to say that the company has actually exceeded many people’s expectations,” says Rebecca Lindland, an analyst with the consulting firm IHS Automotive.
“They’ve done a very good job of greatly improving their product in the ways that matter, in terms of ride and handling, and the things that consumers notice when they go in to purchase a vehicle.”
The influx of sixteen new or updated vehicles allowed Chrysler to see its sales rise ten per cent in may, when its American competitors were holding steady, and Japanese companies were seeing falling sales.
Chrysler made its first profit in the first quarter of this year, and is expected to see those earnings grow, as its restructuring of government loans will save the company 300 million dollars a year in interest.
Chrysler’s last tie up with a European automaker—Mercedes—didn’t end well. Marchionne promised to personally work to make sure this link up with be better for all involved.
“Fiat knows that it’s not genetically superior to Chrysler. It never was. I think both of these companies have got their own history. Both of them independently of each other have made a huge contribution.”
For President Obama, the Chrysler story is a turnaround that many never thought would happen, and few expected to happen so fast.
“I put my faith in the American worker,” he said. “I tell you what, I’m going to do that every day of the week, because what you’ve done vindicates my faith.”
Follow Jeff Gilbert on Twitter @jefferygilbert