Chrysler may rescue Fiat's profit targets

Fiat-Chrysler CEO Sergio Marchionne loves saying that he runs both automakers at "the speed of light" and it looks like that's how fast a reborn Chrysler will rescue its ailing Italian partner.

Fiat can reach – or exceed - its 2011 profit targets only if Fiat's results and Chrysler's results are consolidated, something likely to happen as soon as the second half, after Fiat boosts its Chrysler stake to 46 percent from 30 percent, possibly at the end of this month.

Looking at first quarter results, Chrysler's net profit was $116 million (78.6 million euros) -- double that of Fiat's 37 million euros net profit for the same quarter.

For the full year, Marchionne expects Fiat to report about 300 million euros in net profit, a target that looks extremely tough for Fiat to reach on its own after the first quarter delivered just 12 percent of the annual forecast.

Chrysler is on track to reach the higher value of Marchionne's outlook for the full year, about $500 million (338 million euros).

So I expect Fiat not only to reach, but also to exceed its full year 300 million euro net profit forecast – I leave the exact quantification to financial analysts – but only thanks to the consolidation of Chrysler.

It's not the first time a rescued partner has helped its rescuer. For many years Nissan's profits beefed up Renault's results – but the speed of Chrysler's recovery and its likely rescue of Fiat so soon is a big surprise.

I believed from day one that Marchionne had masterminded a great move in taking over Chrysler. Despite widespread skepticism, I also believed he could successfully turn around Detroit's smallest automaker.

But if someone had told me that Chrysler would rescue Fiat within two years of their tie-up, I would have said "no way."

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