Why Chrysler's Profits Are a Problem for Fiat


Chrysler reported a strong third-quarter profit, even as glitches with the new Jeep Cherokee cost the company big. Photo credit: Chrysler

Last week, Chrysler reported a strong third-quarter profit of $464 million. That profit came despite the fact that sales of the all-new Jeep Cherokee, shown above, were zero during the quarter: Software glitches kept the critical new Jeep from shipping until October.

Still, the results were an impressive showing for the No. 3 Detroit automaker. Its much-improved Ram pickups are competing well against big-selling entries from Ford and General Motors . And its overhauled Jeep Grand Cherokee SUVs have been in high demand.

But this success has created a conundrum for Fiat , the Italian automaker that owns 58.5% of Chrysler. Fiat has been taking big losses in Europe, losses that Chrysler's profits have mostly offset -- but those profits have made Chrysler more attractive to potential investors.

That's a problem, because Fiat has been trying hard to buy the shares of Chrysler that it doesn't yet own. Those shares are held by a UAW trust that wants more money for them than Fiat is willing to pay, and is determined to sell them in an IPO instead. In this video, Motley Fool contributor John Rosevear shares the latest on Chrysler's possible public offering, and on the old-school negotiating tactics being employed by Chrysler (and Fiat) CEO Sergio Marchionne in his battle with the UAW trust.

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The article Why Chrysler's Profits Are a Problem for Fiat originally appeared on Fool.com.

Fool contributor John Rosevear owns shares of Ford and General Motors. You can connect with him on Twitter at @jrosevear. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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