Smart Borrower Blog

Chrysler to Repay Government Loans in Full


May 9th, 2011 @ 3:47 AM by Debbie Dragon


Chrysler, the auto dealer many thought might not make it out of the recession, seems to finally be standing on near solid ground. During the first quarter of this year, Chrysler finally saw the first quarterly profit since 2006. Chrysler is the last of the three big auto makers to reach the profit margin. During the first quarter, profits came in at 116 million where last year during the same quarter, they lost 197 million.

In light of the first quarter profits coupled with the fact that the company is on track for selling their goal of 2 million vehicles this year, Chrysler CEO Sergio Marchionne has announced plans to pay back the government bailout loans next month before they hit the two year anniversary of the loan origination.

“Hopefully … less than two years after we received government support, we will repay every dollar that was lent to us by the American and Canadian governments, with interest,” he said.

Marchionne along with other Chrysler heads met last week in New York with bankers, and meetings are expected to continue this week with potential investors. Chrysler still owes the US and Canadian governments a sum of $7.5 billion dollars. According to the Detroit Free Press, the company is hoping to get 2.5 billion in institutional investments, another 3.5 billion in a loan that would last six years and the final 1.5 billion in the form of a line of credit. Chrysler is looking to get out from under the high interest payments that must be made under the government loans.

Additionally, Fiat is planning to invest and control a larger share of Chrysler as soon as the money situation has been hammered out. Fiat’s investments are expected to come in at 1.27 billion and with the investment, their ownership of the company will go from 30 to 46 percent.

Chrysler’s comeback can be attributed to redesigned vehicles that fit customer needs along with higher prices. Looking to the future, the company plans to focus on fuel efficiency to stay competitive.

About Debbie Dragon
Debbie Dragon is a full time freelance writer and the co-owner of ReliableWriters.com.

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