When President Obama’s automobile task force was mulling a menu of seemingly bad options on how to save the car industry in 2008, one of its earliest assumptions was that Chrysler was deader than a Rambler. In Time’s cover story this week, (available to subscribers here) you can find out why Obama’s decision to sell a very used automobile company to Italy’s Fiat has proved to be a good deal for both parties.
After some intense negotiations, auto czar Steven Rattner was persuaded by Fiat CEO Sergio Marchionne to hand over the keys to Chrysler, and throw in some $5 billion in loans.
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The payoff? Chrysler is surging, the government got its money back, with interest, and more than 40,000 jobs have been preserved. Indeed, Chrysler is doing so well this year, with sales up 20%, that it is investing $500 million in its Toledo, Ohio plant to build more Jeeps and add 1,100 jobs.
It’s one of the great turnaround stories to come out of the financial meltdown, and certainly an argument that government bailouts aren’t necessarily a losing proposition, given the right circumstances. And that’s what Marchionne got right. “There were things that Fiat had, that I had, that if applied here could have pulled this out,” he told me. And, he points out, “I had a guy who was willing to fund it.” That guy was Obama, of course.
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Chrysler is leading the charge as U.S. carmakers are ranking up a great year in a so-so economy. GM is up 7% in sales in the last quarter and Ford up a healthy 14%. The Center for Automotive Research says that the industry, including foreign labels, could add as many as 167,000 jobs in the next few years. That’s good news for an economy with unemployment still near 9%. It won’t hurt the President’s reelection bid either.