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Chrysler LLC has filed for an initial public offering (IPO), returning to publicly traded status after 15 years in the wilderness of global business uncertainty – and the Chrysler IPO comes at a great time for the company and for the whole American auto industry.
You see, not even five years ago, the Big Three were teetering on the edge of destruction and irrelevance, with dismal sales and empty coffers, running losses in the hundreds of millions on products that nobody wanted. The global financial crisis was the last nail in a coffin more than 10 years in the crafting.
Chrysler and General Motors Co. (NYSE: GM) took bailouts totaling about $25 million. Ford Motor Co. (NYSE: F), who famously "refused the bailout," took advantage of a $9 billion "line of credit" it begged from the government – a bailout in all but name.
But a funny thing happened after the bailouts. The automakers actually managed to turn things around – and they did so in spectacular, convincing fashion.
Starting in 2010, less than two years after the worst of the crisis, General Motors declared that it would have a profit on its hands – the first since 2004. It announced that it was buying back $2.1 billion in stock from the government, beginning to pay back the bailout.
The same year, Chrysler reported its smallest loss since merging with Italian automaker Fiat S.p.A (ADR) (FIATY) and exiting bankruptcy.
In 2011, Chrysler posted a 16.7% increase in sales over 2010. Ford posted a 24.3% gain, and GM posted 12.2%. American auto marques routinely began to top lists of best-selling models. 2012 saw more of the same, with double-digit gains amidst an anemic overall economic recovery.
Healthy share prices for auto stocks draw a fat line under that assertion. Ford Motor Company stock is up more than 34% for the year, while General Motors' shares are up more than 31% over the same time frame.
2013 has been a good year for Chrysler, as second-quarter profits climbed 16%.
The Chrysler IPO Saga
In an industry marked by dramatic turnarounds, the Chrysler IPO fits right in…