A Resurgent Chrysler Says It Is Here to Stay

DETROIT — A year ago, Chrysler didn’t have a single new vehicle to display at its hometown auto show, and rival executives were taking bets on how long the smallest and most troubled of Detroit’s three automakers would last.

Now it is looking like the obituaries were premature. After stabilizing sales in the United States last year, Chrysler is in the midst of a product blitz that company executives and industry analysts say should help it pay off its government loans and re-emerge as a public company this year.

Chrysler’s chief executive, Sergio Marchionne, said Monday that the company was gaining traction with new products after subsisting on older models in the aftermath of its government-financed bankruptcy in 2009.

“I haven’t gotten any questions yet today like, ‘Will you be here next year?’ ” Mr. Marchionne said on the opening day of media previews at the North American International Auto Show here. “There were some severe doubts that we could execute what we promised.”

It has been a difficult road back so far for the company, which has lagged General Motors and Ford in its comeback. But the addition of several new and revamped models helped increase Chrysler’s sales in the United States by 16 percent in 2010, and now the company appears to be positioned to gain market share for the first time in several years.

Chrysler still trails G.M. and Ford, both of which are expected to report substantial profits for 2010 later this month. But it has gotten a big boost from the introduction of the redesigned version of its Jeep Grand Cherokee sport utility.

Industry analysts had been skeptical that the S.U.V. would do well in a market more and more dominated by lighter-weight crossover vehicles. Sales of the Grand Cherokee, however, increased 68 percent last year and helped the overall Jeep brand improve sales by 25 percent. On Monday, the company also unveiled a new version of its flagship sedan, the Chrysler 300. It is an unapologetically large car that Mr. Marchionne predicted would appeal to consumers not interested in downsizing.

With its big grille and spacious interior, the 300 stands out from the compact and hybrid cars that most automakers are highlighting in Detroit. At a base price around $30,000 and with fuel economy estimated at 27 miles per gallon on the highway, the car is a critical building block in restoring Chrysler’s reputation.

“I think this company is slowly proving it can come back,” said David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich. “They have been helped quite a bit by relatively stable fuel prices.”

Most of Chrysler’s new vehicles have been produced in collaboration with its Italian partner, Fiat. The Obama administration gave Fiat a 20 percent stake in Chrysler in exchange for providing new technology to the company, and set benchmarks for it to increase its ownership position.

On Monday, Fiat increased its stake to 25 percent because it had met the guideline of producing a new fuel-efficient engine in the United States. Fiat can raise its ownership to 35 percent by building a new small car in the United States and increasing its international sales.

Mr. Marchionne said Fiat might raise its stake as high as 51 percent once Chrysler repays the $7.1 billion in loans it still owes to the United States and Canadian governments.

He said Chrysler was planning to pay off the loans this year and then pursue an initial public stock offering to reduce the majority ownership position of the United Automobile Workers health care trust — currently 63 percent — and smaller stakes held by the American and Canadian governments.

“We are going to repay one hundred cents on every dollar of loans we received,” said Mr. Marchionne. He said it was unlikely that Chrysler would attempt a stock offering until its loans were repaid.

“I think it would be advantageous for us to repay it all before we do an I.P.O.,” he said.

Chrysler has yet to post a quarterly profit since emerging from bankruptcy, but Mr. Marchionne indicated that it was getting close. “We should see in the first or second quarter how far we’ve come,” he said.

Chrysler’s long-term outlook is heavily dependent on a series of smaller, fuel-efficient models it will get from Fiat, the first of which is the tiny Fiat 500 micro-car that is to arrive in this country later this year.

But in the interim, Chrysler is hewing to its previously successful formula of stylish, affordable cars and rugged sport utility vehicles — albeit with better mileage than previous products.

Mr. Marchionne said there was no question the company would meet the new federal fuel economy guidelines of 36 miles per gallon, which go into effect in 2016.

But he said that most of Chrysler’s fuel-economy improvements would come from improving its internal combustion engines rather than introducing a large number of electric or hybrid vehicles.

“The downsizing of our engines is continuing,” he said.

Still, Chrysler is the most vulnerable of the Detroit auto companies to a rise in fuel prices. About 80 percent of its sales in the United States are light trucks rather than cars, and that won’t change until the Fiat-based models go on sale. But even its competitors are impressed by the early stages of its turnaround.

“You have to give them credit for the product freshening they’ve done this year,” said James Farley, Ford’s head of global sales and marketing. “You have to respect that they are executing their plan.”

The arrival of the new Chrysler 300 is a big turning point for the company. The statuesque sedan is the linchpin of the brand’s promise of “affordable luxury” and aggressive styling. Mr. Marchionne said the car’s size and fuel economy would not deter consumers looking for stylish alternatives to an S.U.V. or crossover vehicle.

“You want a full-size car, this is the best fuel economy you can get,” he said. “If you want 37 miles per gallon, go get a Fiat 500.”