Chrysler dealers applaud news today Fiat will buy the government’s stake in the auto maker, but say it will make little difference on the sales floor because the federal-ownership cloud cleared long ago.
“It’s a non-issue,” says Ray McCarthy, new-car sales manager at Bonham Chrysler-Dodge-Jeep in Bonham, TX. “We’re glad they’re doing well enough to buy the government out, but our customers haven’t been coming in expressing any concern about it.”
Fiat and the U.S. Treasury announce today the government will sell its 6% ownership in Chrysler in a deal valued at $560 million. The deal comes some 10 days after Chrysler repaid $5.1 billion in restructuring loans to the Treasury.
The government of Canada, which also aided Chrysler, will receive $15 million as part of the deal while retaining a small equity stake.
“It’s clear that President Obama’s decision to stand behind and restructure this company was the right one,” Treasury Secretary Timothy Geithner says in a statement.
After today’s transaction, Chrysler will have returned $11.2 billion of the $12.5 billion it received to move through bankruptcy in 2009 and conduct its subsequent restructuring. The government concedes it is “unlikely to fully recover” the remaining $1.3 billion it lent the auto maker.
Fiat/Chrysler CEO Sergio Marchionne says the deal demonstrates the Italian auto maker’s confidence in Chrysler’s ability to rebuild and “accelerates our integration agenda” toward creating “a global, efficient and competitive” Chrysler.
The government’s divestiture also effectively removes any link to the controversial auto industry bailout, which also saw $50 billion go to the bankruptcy and restructuring at General Motors.
Consumers and pundits lambasted the moves as anti-American, prompting some to claim they would boycott the auto makers.
But as GM still carries in many conservative circles the nickname of “Government Motors,” a stigma senior executives admittedly cringe over, Chrysler arguably skirted much of the public backlash – even though it was the second government bailout for the Auburn Hills, MI-based auto maker. The first occurred in 1980.
David Bower, manager of and chief financial officer at Chapman Automotive Group in Phoenix, AZ, which operates several Western Chrysler-Dodge-Jeep stores, suggests work remains ahead for the auto maker.
But nobody’s complaining about the bailout anymore. “None,” he says flatly.