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FCA close to paying off debt, outperforming Ford in earnings

FCA boosting output of SUVs, trucks in U.S. Marchionne says the company no longer needs a merger partner FCA expects to pay off all debt this year "There's a very strong likelihood that we will outperform Ford" MILAN/DETROIT — Fiat Chrysler's shift to sell more trucks and SUVs boosted margins yet again in its North American profit center, making Chief Executive Sergio Marchionne confident he can hit most of the final targets of his five-year turnaround plan. FCA has been retooling some U.S. factories to boost output of lucrative sport-utility vehicles and trucks while ending production of some unprofitable sedans. This put the world's seventh-largest carmaker on track to become debt-free by the end of the year, and allowed Marchionne to make good on his promise to close the gap on larger U.S. rivals General Motors (GM) and Ford. "There's a very strong likelihood that we will outperform Ford in terms of operating earnings in 2018," Marchionne told analysts on an earnings call Thursday. "That's something that if I told any of us in the room here that would've been doable five years ago, nobody would have believed it." As the 65-year-old executive prepares to hand over the reins to an internal successor next year, he said the improvements mean the company no longer needed a partner to survive. The carmaker has often been the subject of merger speculation, especially after its unsuccessful 2015 attempt to tie up with GM. "The necessity to find a partner, to try and guarantee our survival, going forward, is put to bed. I mean we're done," Marchionne told analysts on a post-results conference call. North America accounted for 71 percent of earnings last quarter, and profit margins in the region rose to 8 percent from 7.1 percent a year earlier, even as shipments fell 3 percent. Meanwhile Ford's automotive margin for North America slipped to 6.8 percent, down from 8.5 percent a year earlier.FCA trimmed its expectations for 2018 revenues and forecast adjusted operating profit of at least 8.7 billion euros, at the lower end of a previously given range. Analysts said FCA's margin improvement was impressive, and it could be on the cusp of a big boost from its new Jeep Wrangler and Jeep Cherokee models and its Ram 1500 truck. FCA ready to pay off its debt But the Italian-American carmaker expects to cancel all debt during 2018 — possibly by the end of June — and generate around 4 billion euros in net cash by the end of the year.

Fiat Chrysler Automobiles targets mid-October IPO

The merged Fiat Chrysler Automobiles is targeting October 13 to launch its initial public offering on the New York Stock Exchange, CEO Sergio Marchionne told reporters assembled for a meeting in Rimini, Italy.
"The most likely date for the listing in the US is October 13," Marchionne said, according to Reuters.
Marchionne is trusting that the money made in the IPO will be contribute heavily his ambitious, $64-billion five-year growth plan, which will see FCA reboot Alfa Romeo and Maserati and expand Jeep's global presence. Should the IPO fall short, though, Marchionne has confirmed that "all decision [sic] on any capital increase will be taken by the board of FCA at the end of October."

Auto bailout cost the US goverment $9.26B

Depending on your outlook, the US Treasury's bailout of General Motors, Chrysler (now FCA) and their financing divisions under the Troubled Asset Relief Program was either a complete boondoggle or a savvy move to secure the future of some major employers. Regardless of where you fall, the auto industry bailout has officially ended, and the numbers have been tallied. Of the $79.69 billion that the Feds invested to keep the automakers afloat, it recouped $70.43 billion – a net loss of $9.26 billion. The final nail in the coffin for the auto bailout came in December 2014 when the Feds sold its shares in Ally Financial, formerly GMAC. The deal turned out pretty good for the government too because the investment turned a 2.4 billion profit. The actual automakers have long been out of the Treasury's hands, though. The current FCA paid back its loans six years early in 2011, the Treasury sold of the last shares of GM in late 2013. According to The Detroit News, the government's books actually show an official loss on the auto bailouts of $16.56 billion. The difference is because the larger figure does not include the interest or dividends paid by the borrowers on the amount lent. While it's easy to see fault in any red ink on the Feds' massive investment, the number is less than some earlier estimates. At one time, deficits around $44 billion were thought possible, and another put things at a $20.3 billion loss. Outside of just the government losing money, the bailouts might have helped the overall economy. A study from the Center for Automotive Research last year estimated that the program saved 2.6 million jobs and about $284.4 billion in personal wealth. It also indicated that the Feds' reduction in income tax revenue alone from Chrysler and GM going under could have been around $100 billion for just 2009 and 2010, significantly more than any loss in the bailout.