Chrysler Stops Hemorrhaging Money

Chrysler Stops Hemorrhaging Money


And they could break even this year. So while they won’t be paying back the government loans as soon as GM, they’re still on track to meet their obligations in the future.

More from Wash Post:

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. […]

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.

So, a lot of encouraging news here and, as I’ve said many times, this was never an ideal situation…but it was a necessary one. We couldn’t allow an economic collapse to put our American-owned manufacturing base out of business.

More as it develops…

  • Tully

    We couldn’t allow an economic collapse to put our American-owned manufacturing base out of business.

    So, the government is going to give back all that Chrysler stock to the original owners? Maybe pay up the bonds they extorted away at a fraction of value? Or even just make up the difference to former stockholders and bondholders between the government-forced and government-priced bankruptcy sale and the current value?

    Yeah, thought not. In this case “American owned” is a phrase magically transformed from meaning “owned by Americans” to “owned by the unions and a foreign auto company, Fiat, and the rest by the government.”

  • Nick Benjamin

    What did you want the government to do? Chrysler was going bankrupt. When that happens the shareholders are always wiped out.

    As for the bondholders it’s theoretically possible they would have taken a smaller hit in private bankruptcy proceedings. But it’s also entirely possible they would have gotten less.

    Every expert I’ve read on the issue says without Uncle Sam Chrysler would have been in Chapter 7 Bankruptcy because they did not have enough cash to continue operating. Which means their assets would have been auctioned off.

    Given that they had virtually no assets, that the assets they had were worthless in the Jan ’09 market (nobody wanted cars, robots that make cars, etc.), and that assets sold at a bankruptcy auction are usually sold for a fraction of their value; it’s unlikely the auction would have been lucrative.

    And bondholders were not the only people who had a claim on Chrysler’s assets. They hadn’t paid their suppliers in months. Dealerships were owed cars. The pension fund was owed money.

    IMO it’s likely that without the government-supervised bankruptcy Chrysler bondholders would not have gotten a penny,.

  • Tully

    Your ignorance is showing, Nick. Secured bondholders are first in line in a bankruptcy. They get paid in full before anyone else gets a dime. It’s one of the contractual obligations of borrowing that money in the first place.

    Unless the government interferes and changes the rules, of course. And please don’t ask me to shed tears for the mismanaged union pension funds — which us taxpayers are also on the hook for today through the PBGC. The union got the lion’s share of the company AND kept their pension funds. The taxpayers got the bill.

  • Nick Benjamin

    You act like such a smart guy, yet you miss the most basic of points:
    First in line for peanuts gets you peanuts.

    With Obama’s plan they got something.

  • Michael LaRocca

    Anybody still driving a K car?

  • mw

    Not a K car, but I am still driving a ’99 Jeep Grand Cherokee. But that is because I am cheap. I won’t buy another Chrysler product again though. GM either. Ford is still looking good.

    And it is not any more true now than it was when I wrote that post that we needed to dump $75 B into these two companies to save putting our “American-owned manufacturing base out of business”. Capital moves to where it is used efficiently and productively, unless government mandate forces it to stay where it is used poorly. And sometimes it is important ot keep capital where it is used poorly – you know – in order to protect union membership rolls and their large political contributions.

    It did, however put two failing companies on taxpayer life-support that continues to this day with no end in sight. Moreover, it did it to the detriment of other potential and actual American manufacturing based companies and jobs, who are now forced to compete with government subsidized manufacturers for capital and customers. So it goes.

  • Nick Benjamin

    So you’re claiming Bush bailed GM out because of all the money the UAW gave him? Forgive me if I’m not convinced.

    The real reason he did it, and he is the one who gave them the first bailout, is that in December of 2008 our economy was in huge trouble. Credit markets were frozen. GM and Chrysler had no money to pay their bills, so they were headed for Chapter 7 bankruptcy. That would have put tens of thousands on unemployment immediately. Shortly followed by most GM suppliers (who hadn’t been paid in months), and the dealerships would have gone under.

    I don’t think I’m exaggerating much when I say that decision saved millions of jobs, and kept unemployment from hitting 20%.