Chrysler Group, the most diminished of the (once-) Big Three and the automaker marked "Most Likely to Be Liquidated for Three Sticks of Gum and a Roll of Pennies" for much of the past decade, reported its first full-year profit since 2009 on Wednesday.
Chrysler's $225 million fourth-quarter profit was enough to put all of 2011 in the black for America's No. 3 automaker, giving it a net income for the full year of $183 million.
Chrysler CEO Sergio Marchionne said on Wednesday that "all of" parent Fiat's (OTC: FIATY) 2011 net income came from Chrysler, as the Italian side of the firm has struggled with rough economic conditions in Europe.
Maybe this "Imported From Detroit" thing is working out for them after all.
A surprising turnaround gathers steam
The story of Chrysler's return from the (nearly) dead is simple and good: Its products got a lot better, and more people have been buying them. Meanwhile, costs have come down sharply.
But the story behind the story is a good one, too, a rare case of merger partners finding profitable synergies and realizing them at high speed. Marchionne's dramatic initial vision of "one company in two houses" -- the two houses being Turin and Auburn Hills, the Detroit suburb Chrysler calls home -- became a reality very quickly, as Fiat and Chrysler managers worked together to cut costs out of Chrysler's battered operation and overhaul its product line on the fly.
That product overhaul has been remarkable, and is the key to Chrysler's current success. The bare bones of the sad line of cars and trucks that the company was (mostly not) selling in 2008 are still recognizable in its current products, but they've been given extensive makeovers and fine-tuning that have made them much more competitive.
The results have been gratifying, with month after month of hefty sales gains in the U.S., and for the first time, the beginnings of traction for Chrysler's brands overseas. Chrysler posted an eye-popping 43% increase in retail sales in the U.S. in 2011, enough to power it to a 10.5% market share and fourth place in the domestic sales standings.
But in some ways, those were the easy pickings -- making the most of what Chrysler already had. Now comes the hard part.
Enter the Dart, and some new challenges
Signs of a consumer shift toward smaller cars have become more apparent in recent months. Sales of Ford's
The Focus and Cruze have been the standard-bearers of Detroit's renaissance, in a way, taking advantage of production troubles at Toyota
At the moment, Chrysler's got nothin'. The company's last compact, the Dodge Caliber, was euthanized in November. Aside from the Fiat 500, a tiny niche model, Chrysler doesn't have a small car to sell in the U.S.
But soon, it will have the all-new Dodge Dart, the first truly new product of the Fiat-Chrysler marriage. The Dart, a compact built on Alfa Romeo bones, with clean lines and an appealing array of engine options, certainly looks the part. However, the jury will stay out until reviewers have had some time with production examples.
It's fair to say that the Dart's launch, set for this spring, will probably be Chrysler's most critical event of 2012. Will it be enough to sustain the company's momentum as it works toward an IPO later this year or in 2013? Watch this space.
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