Chrysler to Recover From $370M Government Bailout Loans

After recording its first post-bankruptcy profit, Chrysler Group LLC posted a net loss of $370 million in the second quarter due to expenses related to the repayment of government bailout loans. The company has incurred a $551million charge consisting in paying back the U.S. Department of Treasury and the Canadian loans which helped maintaining the automaker’s survival in 2009.

The manufacturer was kept afloat by a big advertising campaign. As a result, Chrysler’s second-quarter worldwide sales increased 19 percent to 486,000 units. Another thing worth mentioning is that the manufacturer’s cash reserves grew up to $300 million during the past three months arriving at $10.2 billion

"There is no doubt that Chrysler Group has taken a huge step forward this quarter. Refinancing our debt and repaying our government loans six years early reinforces our conviction that we are on the right path to rebuilding this company and restoring it to its rightful place on the global automotive landscape."Sergio Marchionne Chrysler CEo was quoted as saying by Autoweek,

Since being under Fiat S.p.A control, Chrysler recorded a net profit in the first quarter of $116 million, being a first since exiting a U.S.-steered bankruptcy. Thus Fiat acquired the U.S. Department of Treasury’s remaining 6 percent holding as well as Canada’s 1,5 percent stake by paying $625 million.

Giving the bailout situation, Fiat will be allowed to boost its sales percentage, by building a 40-mpg car in the United States. The manufacturing process is expected to begin in the fourth quarter when Chrysler is expected to introduce a replacement for the Dodge Caliber.