Sergio Marchionne Letter to Chrysler Workers

Dear Colleagues,

I'm pleased to tell you that Chrysler Group today announced a net income of $116 million for the first quarter of 2011. This is our first quarterly net income since we began operations in June 2009 and represents another significant marker on our way to building a strong, globally competitive company.

The preliminary financial results that we released today showed substantial improvements across the board compared with the same period a year ago. Net revenues in Q1 of 2011 were up 35 percent to $13.1 billion. We posted a modified operating profit of $477 million, compared with $143 million in the first quarter of 2010. A major factor was customer enthusiasm for our 16 all-new and significantly refreshed products, which continued to win accolades. Positive pricing and vehicle mix also contributed to the results.

We ended the first quarter with $9.9 billion in cash, versus $7.3 billion at the end of 2010 and $7.4 billion at the end of Q1 in 2010. That brought our total available liquidity to $12.1 billion, including $2.3 billion still available under our loan agreements with the U.S. Treasury and the Canadian and Ontario governments.

Worldwide, we sold 394,000 vehicles in this year's first quarter, an increase of 18 percent, or 60,000 units, versus the same period last year. Greater availability of our new products at dealerships, successful launch campaigns and an improving U.S. industry contributed to the sales increase. Our U.S. market share was 9.2 percent in Q1 2011, compared with 9.1 percent in the same period of 2010. Our Canadian market share climbed to 14.7 percent compared with 13.7 percent in 2010.

Among many first-quarter highlights was the delivery of the first Fiat 500 Prima Edizione special-edition models to customers in the U.S. and Canada, marking the return of the Fiat brand to North America after a 28 year absence. The 500 is evidence of the historic alliance being built between Chrysler Group and Fiat.

Our partnership was further strengthened with the recent announcements that Fiat has committed to increase its ownership interest in Chrysler Group by 16 percent if Chrysler Group refinances and repays its government loans in the second quarter, and that Chrysler Group intends to complete those transactions in that time period. These followed an earlier announcement that Fiat's ownership in Chrysler Group had increased from 25 percent to 30 percent based upon meeting commitments relating to increased distribution of Chrysler vehicles in Europe and Brazil, and Fiat's use of our technology outside of NAFTA. We are grateful for the U.S. and Canadian government assistance, and we look forward to paying back our loans and to providing a solid capital structure for Chrysler going forward.

Another first quarter highpoint was the remarkable success of the Chrysler 200 U.S. launch advertising that debuted on the Super Bowl with a two-minute commercial featuring Eminem and the theme, "Imported from Detroit." The advertising won critical acclaim, drew 10.5 million hits on YouTube, and helped raise consumer awareness of the vehicle, contributing to sales increasing 191 percent in March 2011 from February 2011.

We now have a clear view of a promising future. Our first quarter results validate the great efforts and many sacrifices you have made to help restore confidence and credibility in our company. It is evident that we are on the right course to position Chrysler Group for long-term viability. This progress would not have been possible without your dedication. I ask you to remain committed and passionate about your work in order to continue this turnaround.

Going forward, it's important to keep in mind that there is no finish line. The fierce competition in the global auto industry is relentless, and we cannot afford to be satisfied with what we have accomplished to date. It's important that we remain humble and not take anything for granted. Let's stay focused on the job of delivering great products and services to our customers and on continuing to achieve the sales and financial targets of our five-year business plan.

Each of us controls our own actions and attitudes. I urge you to continue to demand the best of yourself, your colleagues and your company.