Nov. 5 (Bloomberg) -- Chrysler Group LLC, the U.S. automaker run by Fiat SpA, said it will break even next year on an operating basis and begin to post a net profit in 2011 as it works to pay off all of its government loans by 2014.

Chrysler has $5.7 billion in cash including $1.7 billion amassed since leaving bankruptcy June 10, Chief Executive Officer Sergio Marchionne said yesterday. The company expects to end the year with $5 billion in cash and access to a $2.3 billion credit line.

The financial plan for Chrysler is based on rising sales and market share in 2010 and beyond. The third-largest U.S. automaker’s breakeven point on a net basis is 2 million vehicles globally.

“Fundamentally, this thing needs to earn its right to survive as a competitive American carmaker,” Marchionne said. “That’s the real target.”

The automaker will post an operating profit of up to $500 million from June 10 through the end of the year, said Richard Palmer, the company’s chief financial officer, in presenting the company’s five-year business plan to analysts and journalists yesterday at its headquarters in Auburn Hills, Michigan.

The automaker will end the year with $13 billion in total debt and plans for $8 billion in 2014. Chrysler will spend $23 billion on new products over the next five years and will refresh or re-engineer 75 percent of its products in 2010.

Being ‘Cheap’

Building Chrysler’s cash supply may help Marchionne cope with falling sales -- down 39 percent in the U.S. through October -- and market share until vehicles developed with Fiat are ready for sale. Chrysler has forecast that its fleet of vehicles will have 25 percent better fuel efficiency in 2014.

“The new Chrysler is being parsimonious -- cheap,” Marchionne said, referring to efforts to reduce costs.

For the first time since emerging from bankruptcy, Chrysler officials laid out their plans for the automaker’s brands, finances and prospects for paying back government loans. The automaker is majority-owned by a United Auto Workers union retiree health-care trust and 20 percent owned by Fiat.

Chrysler plans to issue public stock after 2010. “This is something we must do,” Marchionne said.

Chrysler plans to boost worldwide sales of its Jeep brand 60 percent to 800,000 by 2014. The company will make major changes to each model in the lineup within the next year and scrap the brand’s Commander sport-utility vehicle, Jeep CEO Mike Manley said in the presentation.

Jeep also will begin to offer more derivatives of its Wrangler SUV, he said.

The Dodge brand will have 11 new or restyled models by 2014. The first all-new model will be a seven-passenger SUV coming out in late 2010. The Nitro SUV will also be restyled as more of a city-cruising model aimed at younger buyers and less of an off-road vehicle, Dodge brand CEO Ralph Gilles said in the presentation.

New Logo

Dodge also will get an all-new midsize sedan to replace the Dodge Avenger in 2012 or 2013 as well as a compact sedan and a subcompact hatchback. The compact sedan will have the best fuel economy of any car Chrysler has ever made, Gilles said.

A completely redesigned Charger full-size sedan will go on sale late next year, and Dodge is studying a replacement for its Viper sports car, he said.

The brand will get a new logo, separate from the ram’s head icon that will be reserved for the Dodge truck brand.

While discussing many new vehicles, the automaker didn’t reveal any models.

“I would have liked to have seen the products -- without saying what the products are going to be, the plan is just words,” said John Wolkonowicz, an automotive analyst at IHS Global Insight Inc., who attended the event.

Chrysler said it will complete in 2011 the consolidation of its dealership network that started in bankruptcy. The company plans to invest $500 million into dealerships in next five years, including $120 million in 2010.

Changes include special areas in dealerships for the Fiat 500 subcompact that will have a dedicated sales staff and management. It will be sold “mainly in metro markets” said Peter Grady, vice president of network and fleet development.

Purchasing Savings

Chrysler will save $2.9 billion over the next five years through shared parts purchasing with Turin, Italy-based Fiat, starting with $500 million in net savings next year, said Dan Knott, the Chrysler purchasing chief. Chrysler and Fiat are already making joint purchases, Knott said.

Fiat rose 45 cents, or 4.4 percent, to 10.79 euros in Milan. It has more than doubled this year.

To contact the reporters on this story: Mike Ramsey in Auburn Hills, Michigan, at mramsey6@bloomberg.net; Sara Gay Forden in Auburn Hills, Michigan, at sforden@bloomberg.net

Last Updated: November 5, 2009 00:01 EST