DETROIT – The cost of paying off government debt kept Chrysler from making money in the second quarter, but that didn't stop its cars from selling well.
U.S. sales rose 20 percent for the quarter, and prices are up for new or revamped models. Chrysler sold 1 million cars and trucks around the world in the first half of the year. And it's on pace to reach its goal of 2 million this year.
"We are in the process of rebuilding the financial viability of Chrysler," CEO Sergio Marchionne said. "I think we have made good progress in the second quarter."
Higher sales and car prices meant more revenue for the company, which is just two years removed from bankruptcy. Revenue jumped 30 percent to $13.7 billion as Americans bought more Jeep Grand Cherokee SUVs and revamped cars such as the Chrysler 200 and Dodge Avenger.
Without a big one-time charge for refinancing bailout debts to the U.S. and Canadian governments, Chrysler would have earned $181 million.
But the $551 million charge hurt, leading the company to a net loss of $370 million.
The company still expects to earn $200 million to $500 million this year, excluding the debt repayment expense. It predicted revenue of $55 billion for the year.
The average price for a Chrysler vehicle rose to $29,964 for the quarter, up 5 percent from year earlier, according to Edmunds.com automotive website. That's because the company spent much less on rebates and other discounts.
That could change in the second half. Japanese automakers could cut prices to lure back customers lost because of models shortages following the earthquake in Japan. They say Detroit automakers will have to respond.
But Marchionne told reporters that Chrysler will stick to its prices. He also said predictions of discounts have been exaggerated.
Last week, Chrysler passed a big milestone. The U.S government no longer owns a piece of the company after it sold its shares to Fiat SpA, the Italian car company also run by Marchionne that took over management of Chrysler following bankruptcy.
Chrysler and its financing arm needed a $12.5 billion bailout from the U.S. government two years ago. The company was restructured and Marchionne was placed in charge. Of the original U.S. bailout, $11.2 billion has been repaid. The U.S. Treasury Department says it likely won't recover the remaining $1.3 billion.
Fiat now owns 53.5 percent of Chrysler and is looking to combine the companies. Marchionne said Tuesday he is several days away from announcing a management team to run the combined automakers. He would not say if he'll stay as head of Chrysler.
Since the U.S. government no longer owns any Chrysler stock, Marchionne said government pay limits no longer apply. But he said there would be no across-the-board raises for executives.
Chrysler has another other big shareholder, a trust fund that pays health care bills for retired union workers. The trust wants to convert that stake to cash, possibly in a Chrysler initial public stock offering.
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