Shocker! Chrysler Bringing Home More Bacon than Fiat...

Two years ago, Chrysler was saved from oblivion when the federal government provided a $15 billion bailout and orchestrated a rescue plan that gave the Fiat Group the management control of the company.

Last week, the Italian automaker raised its share in Chrysler beyond 50% for the first time, to 53.5%.So Fiat saved Chrysler in 2009, right? Well, yes, but 2011 is another story altogether.

You see, Chrysler’s US sales increased by 21% in the first six months of the year, whereas Fiat’s European deliveries dropped 12.7% in the same period. But that's only half the story. With the exception of the Maserati and Ferrari brands, the Chrysler Group will contribute to the alliance €155 million for June alone, while Fiat €175 million for the past three months.

If you're looking for an explanation, the answer can be found not only in Chrysler’s rise and Fiat’s fall, but also in the nature of Fiat’s sales as the Italians are mostly active in small car categories where profits are slim compared to the larger and more expensive cars that comprise the bulk of Chrysler’s sales.

Sergio Marchionne, who is the CEO of both Chrysler and Fiat, recently admitted that he intends to unify the management teams into a single, smaller and more efficient entity.

"Chrysler will generate a lot more cash flow and growth than Fiat very soon," said Bruno Lapierre, an analyst with brokerage Cheuvreux.

A merger would be profitable for both automakers, due to economies of scale, and it looks inevitable, as Goldman Sachs stated this week: “With the business of Fiat and Chrysler irrevocably linked, we believe a merger is a logical next step”.

But the question remains: who will benefit from it most? Chrysler, as everyone originally thought, or the former knight in shining armor, Fiat?

Via Reuters

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Chrysler Surpasses Ford as Canada’s Biggest Seller of Light Trucks

Canada’s economy seems unaffected by most of the Western World’s woes, where markets are struggling and unemployment is booming. In fact, Canada’s economy is growing and as a result, unemployment is falling and people are getting jobs. Therefore, they have money to buy cars, or light trucks, pickups and SUVs.

“People who are getting jobs are opting for practical vehicles such as a crossover to get better mileage than a traditional SUV”, said Carlos Gomes, an economist at Scotia Capital. “You have the construction sector holding up very well, and that is positive for the pickup segment.”

This has worked very well for Chrysler, which in the first half of the year has overtaken Ford in light truck segment. That is because, with oil prices rising, new truck buyers are opting for more fuel-efficient models.

For instance, Chrysler’s Dodge Journey sales increased more than the SUVs of rivaling carmakers Ford and GM, the Escape and the Chevrolet Equinox respectively.

However, in total vehicles sales including cars, Ford still leads the market with a 17.4% share, having also beaten GM in 2010 for the first time in many decades. GM is second, with a 15.5% market share, but it can feel Chrysler breathing down its neck with 15.0% and only 4,000 vehicles difference in the first half of the year.

Via Bloomberg

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