Chrysler Group LLC, which is considering refinancing loans from the U.S. and Canadian governments, is looking “at a variety of capital sources,” CEO Sergio Marchionne said.

Marchionne, who also is CEO of Fiat SpA, has said interest on the $7.4 billion U.S. and Canadian government loans has kept Chrysler from earning a profit this year, reported Bloomberg.

“We’re on good track to eventually get rid of this problem,” Marchionne told reporters today in Rome.

Chrysler has contacted banks about borrowing money before a possible initial public offering next year, two people familiar with the effort said last month. Marchionne previously said Chrysler’s board is looking to refinance the government loans as it considers the company’s proper debt level.

The Auburn Hills, Michigan-based automaker has said its effective interest rate on money borrowed from the U.S. government is as high as 14 percent and as high as 20 percent on the Canadian loans.

“We’re working on solutions that are designed to provide stability in the capital structure of Chrysler in the medium to long term,” Marchionne said today. “It’s a relatively complex discussion.”

Chrysler could lower its interest payments by $400 million by refinancing the debt, Stuart Pearson, an analyst with Morgan Stanley, said in a note to investors on Nov. 3.

“We believe refinancing in the capital markets may be possible for Chrysler by mid-2011, by which time it should have a 12-month track record of profitability and cash generation,” Pearson wrote.

Chrysler is scheduled to release third-quarter results on Nov. 8. The company’s second-quarter net loss narrowed to $172 million from $197 million in the first three months of the year. Chrysler ended the second quarter with $7.84 billion in cash.

The U.S. automaker needs to keep a minimum cash balance of about $3 billion for working capital, Moody’s Investors Service said in a November 2009 note.

NEW YORK – General Motors Co. executives will use some charter flights on trips over the next few weeks to meet with prospective investors in the automaker’s upcoming public stock offering, GM said.

GM, Chrysler and Ford Motor Co. sparked public outrage two years ago when executives flew to Washington on chartered jets to ask the federal government for a taxpayer-funded bailout, Reuters reported.

The congressional backlash was so severe that the executives later drove from Detroit for a follow-up hearing in hybrids, a move mocked on “Saturday Night Live.” Ford did not seek a bailout at the time but supported bailouts for its two U.S. competitors to ensure the supply chain would not collapse.

“GM’s corporate travel policy allows charter flights when supported by a business rationale,” GM spokesman Tom Wilkinson told The News York Times. “This is consistent with our requirements under TARP [the federal bailout terms] and our Treasury loan agreement, as our shareholders know.”

The U.S. Treasury Department, which controls the government’s 61 percent GM stake, declined to comment directly on the matter, according to The Times story.

“This is not an issue in which Treasury is in any way involved,” Mark Paustenbach, a Treasury spokesman, told the newspaper.

GM CEO Dan Akerson and several other executives are expected to begin meetings as early as today with potential investors in North America and Europe, according to The Times.

Typically, institutional investors expect face-to-face meetings with the management of companies trying to sell stock. Taking chartered flights ensures the executives will arrive on time for those meetings, also known as “road shows” in the investment world. But given that GM is controlled by taxpayer dollars, the issue has been discussed internally, a source familiar with the matter recently told Reuters.

“It’s fair to say GM is very concerned about appearing extravagant,” said the source. “Even though we always do this, because it’s the only way to really get a road show done properly in an amount of time that minimizes market risk for the seller, this one might be a special case.”

GM on Wednesday finalized terms for the stock offering of about $13 billion to partially repay the taxpayer-funded bailout and reduce the U.S. Treasury to a minority shareholder.

GM’s filing with the U.S. Securities and Exchange Commission was the final step before it begins marketing what is expected to be one of the largest-ever initial public offerings. The investors are expected to span the globe and include sovereign wealth funds.

The automaker plans to sell 365 million common shares at $26 to $29 each, raising about $10 billion at the midpoint, according to the updated IPO papers filed with the SEC.

In addition, GM said it planned to sell about $3 billion of preferred shares that would convert to common shares under mandatory provisions, a less risky form of equity that could attract dividend and growth-fund investors.

The IPO would value GM at just over $41 billion at the midpoint of the price range. Assuming exercise of warrants that are in-the-money, the share count jumps roughly 300 million to 1.8 billion, and GM’s value rises to just under $49 billion.

If everything goes as planned, the offering would be the largest U.S. IPO since Visa Inc.’s $19.7 billion IPO in 2008.

GM’s underwriters could sell an additional 54.75 million common shares and 9 million preferred shares if the IPO attracts robust investor demand, raising another roughly $2 billion and potentially taking the total IPO amount to as much as $15.65 billion, the company said in the amended prospectus.

Once a blue-chip stock, GM is expected to return to the New York Stock Exchange under the “GM” ticker symbol as well as a listing on the Toronto Stock Exchange. GM is expected to price its IPO on Nov. 17 and begin trading on Nov. 18, sources said.

The governments of Canada and Ontario plan to sell down their combined stake to 9.64 percent from 11.67 percent and the UAW’s retiree health care trust fund is expected to reduce its stake to 15.33 percent from 19.93 percent.

GM plans to contribute $4 billion cash and $2 billion of common stock to its pensions after the IPO to address an area of investor concern.

General Motors Co. will drive away from its U.S.-government-financed restructuring with a final gift in its trunk: a tax break that could be worth as much as $45 billion, reported The Wall Street Journal.

GM, which plans to begin promoting its relisting on the stock exchange to investors this week, wiped out billions of dollars in debt, laid off thousands of employees and jettisoned money-losing brands during its U.S.-funded reorganization last year.

Now it turns out, according to documents filed with federal regulators, the revamping left the carmaker with another boost as it prepares to return to the stock market. It won’t have to pay $45.4 billion in taxes on future profits.

The tax benefit stems from so-called tax-loss carry-forwards and other provisions, which allow companies to use losses in prior years and costs related to pensions and other expenses to shield profits from U.S. taxes for up to 20 years. In GM’s case, the losses stem from years prior to when GM entered bankruptcy.

Usually, companies that undergo a significant change in ownership risk having major restrictions put on their tax benefits. The U.S. bailout of GM, in which the Treasury took a 61 percent stake in the company, ordinarily would have resulted in GM having such limits put on its tax benefits, according to tax experts.

But the federal government, in a little-noticed ruling last year, decided that companies that received U.S. bailout money under the Troubled Asset Relief Program won’t fall under that rule.

“The Internal Revenue Service has decided that the government’s involvement with these companies, both its acquisitions plus its disposals of their stock, means they should be exempt” from the rule, said Robert Willens, a New York tax consultant who advises investment banks and hedge funds.

The government’s rationale, said people familiar with the situation, is that the profit-shielding tax credit makes the bailed-out companies more attractive to investors, and that the value of the benefit is greater than the lost tax payments, especially since the tax payments would not exist if the companies fail.

GM declined to comment.

The $45.4 billion in future tax savings consist of $18.9 billion in carry-forwards based on past losses, according to GM’s pre-IPO public disclosure. The other tax savings are related to costs such as pensions and other post-retirement benefits, and property, plants and equipment.

The losses were incurred by “Old GM,” the company that remained in bankruptcy after the current “New GM” resulted from the reorganization last June.

GM’s chief domestic rival, Ford Motor Co., last year adopted a plan to preserve deferred “tax assets” which stood at $17 billion at the end of 2009. Ford can use the tax attributes in certain circumstances to reduce its federal tax liability. Ford declined to comment on the GM tax ruling.

DETROIT – Ally Financial Inc., the former GMAC Financial Services auto and home mortgage lender, has been a small player in used-vehicle financing but intends to target that business for growth, CEO Michael Carpenter said.

Ally, which became a bank holding company in December 2008, boasted that it was the top new-vehicle retail lender in the first nine months of 2010, based on Experian AutoCount data, Automotive News reported.

But the lender holds just a 1.5 percent share of the fragmented used-vehicle retail finance business through September, behind Wells Fargo Dealer Services at 3.6 percent, Chase Auto Finance at 2.3 percent, Toyota Financial Services at 2.0 percent and Capital One Auto Finance at 1.6 percent, the Experian data show.

The used-vehicle finance market is about twice that of the new-vehicle market, making it a “great opportunity for business,” Carpenter said during Ally’s third-quarter conference call this morning.

Ally also intends to build its vehicle leasing business and to finance more vehicles for people with fair and poor credit. During the credit crisis, the lender shrank those businesses to clean up its balance sheet, but “the pendulum swung a little too far,” said James Mackey, interim CFO.

The company increased its nonprime and lease volume this year, but the business is much smaller than it was in 2006 when it was GMAC.

“We need to increase that volume to be a full-spectrum lender,” said Mackey, but at lower levels than a few years ago.

Globally, retail auto finance lending increased 48 percent during the third quarter to $11.4 billion, compared with $7.7 billion in the third quarter of last year. The total includes $9.0 billion in new-vehicle loans and $1.3 billion in used-vehicle loans.

Ally’s new-vehicle lease volume was $1.1 billion, up from just $100 million in the third quarter of last year.

In the United States, total retail originations were $8.3 billion, up from $5.6 billion in the third quarter of 2009 and $8.0 billion in the second quarter of 2010.

At the same time, Ally’s subvented business — financing enhanced with factory incentives — is down. “We are competing fair and square in the marketplace,” Carpenter told analysts.

General Motors-subsidized financing was 76 percent of Ally’s retail loan and lease volume in 2006; currently, it’s just 20 percent of Ally’s business.

The trend was reversed in the past year. In the third quarter of 2010, GM subsidized $1.7 billion in new-vehicle loans and leases, while Ally wrote $2.0 billion in standard loans and leases. That’s down significantly from the third quarter of 2009, when GM subsidized $3.0 billion in loans and leases, and Ally wrote $1.2 billion in standard loans and leases.

Ally’s wholesale penetration in the United States has dipped for both GM and Chrysler dealers from the second quarter of this year. For GM dealers, penetration is also down year over year.

The company financed 83.7 percent of new GM vehicles in inventory in the third quarter, down from 86.6 percent in the second quarter of this year and 85.9 percent in the third quarter of last year. Ally financed 76.2 percent of the new Chrysler Group vehicles in stock, down from 77.1 percent in the second quarter of this year and up from 31.7 percent in the third quarter of 2009.

But Ally contends its commercial business remains strong. “It encompasses floorplan financing, working-capital loans, store upgrades,” Carpenter said. “We’re an embedded, committed competitor in this industry and have been for 90 years.”

Ally reported net income of $269 million in the third quarter of 2010, up from a net loss of $767 million in the third quarter of 2009.

The company has seen three straight profitable quarters overall and seven profitable quarters in a row for its core automotive finance business.

Ally’s North American third-quarter auto finance profit was $568 million, almost double its profit year over year. It reported a $74 million profit in international auto finance, also up substantially year over year. Income for Ally’s insurance business, which serves car dealerships, totaled $114 million, up about 5 percent year over year.

Carpenter cited consistent market share, a more diversified product mix and the addition of Fiat as an auto partner in the United States. Carpenter said he is “optimistic about the long-term prospects for the company.”

Toyota Motor Corp.’s Lexus, buoyed by consumer discounts, beat out Daimler AG’s Mercedes-Benz and Bayerische Motoren Werke AG’s BMW brand in October to lead monthly U.S. luxury-auto sales for the first time since May, reported Bloomberg.

Lexus sales rose 8.1 percent to 21,091 vehicles, the Toyota City, Japan-based automaker said yesterday in a statement. On Nov. 2, BMW reported a 17 percent gain to 19,272 and Mercedes posted an increase of less than 1 percent to 18,351.

Lexus, the top-selling U.S. luxury brand since 2000, is being challenged this year as Toyota copes with record recalls and as Mercedes and BMW benefit from new models. Lexus more than doubled average incentive spending in October to $2,152 a vehicle from $923 a year earlier, according to TrueCar.com, an auto pricing website.

The Toyota unit has been “much more aggressive than they’ve ever been,” Jim O’Donnell, president of BMW’s North American unit, said in a telephone interview. “We’ve now got Lexus joining the fray where they’ve always stood on the sideline and sort of watched.”

U.S. sales for this year through October totaled 183,529 for Lexus, 178,080 for Mercedes and 176,736 for Munich-based BMW, the global leader in luxury-vehicle deliveries.

The totals don’t include non-luxury models such as BMW’s Mini cars or Stuttgart, Germany-based Daimler’s Smart cars and Sprinter vans.

Toyota’s incentive spending and increased advertising in October helped boost Lexus sales, Jesse Toprak, vice president of industry trends at Santa Monica, California-based TrueCar, said in a telephone interview yesterday.

“They clearly want that No. 1 spot for the year,” he said. “Don’t know if that necessarily is going to happen. Looking at the historical sales in December, Benz tends to do quite well. I think it’s going to be a photo finish.”

The Toyota unit used “moderate incentives” to help trim inventory, Mark Templin, U.S. group vice president for Lexus, said on a conference call yesterday.

The automaker enhanced incentives on 2010 models in particular in anticipation of higher volume than actually occurred, he said. As a result, “I think we’ll carry out our 2010 incentives for remainder of the year,” Templin said.

Mercedes has been helped this year by a 53 percent jump in sales of its redesigned E-Class, introduced in 2009. The Daimler unit boosted average incentive spending 9.4 percent in October to $4,389, according to TrueCar.

“They are coming out with a lot of attractive lease deals,” Toprak said.

Mercedes isn’t planning to increase incentive spending at the end of the year, Michael Slagter, vice president of sales for the brand’s U.S. unit, said in an interview.

“We’ll be competitive and do what we need to do to be competitive in the market,” he said.

BMW’s October gains were held back by lack of inventory of the new X3 sport-utility vehicle, which is reaching showrooms late this year, O’Donnell said in the Nov. 2 interview. Sales of the redesigned 5 Series rose 62 percent to 4,925, helped by the arrival of the sedan’s all-wheel-drive version that makes it more competitive with the Mercedes E-Class, he said.

The 5 Series still has room for sales growth, Jessica Caldwell, an analyst at auto-information website Edmunds.com in Santa Monica, said in a telephone interview. “It’s probably going to take a little bit more time to catch on.”

BMW’s average incentive spending fell 34 percent in October to $3,179, TrueCar said.

General Motors Co. and Ford Motor Co. reported U.S. sales increases that topped analysts’ estimates as consumers returned to showrooms, making October the best month for vehicle deliveries in more than a year, Bloomberg reported.

GM’s sales climbed 3.5 percent to 183,759, the Detroit- based automaker said today in a statement. Sales at Ford increased 15 percent to 157,935, the Dearborn-Mich. based company said. Five of the top six automakers by U.S. sales reported gains, and Toyota Motor Corp. had a decline.

Industrywide light-vehicle sales rose to a 12.3 million annual rate in October, researcher Autodata Corp. said today. That’s the fastest since the U.S. government’s “cash for clunkers” incentive program lifted the pace to 14.2 million in August 2009. The average of nine analysts’ estimates compiled by Bloomberg was for the rate to reach 11.9 million last month.

“Consumers who have a job are feeling a little bit better and not fearing every Friday anymore,” said Rebecca Lindland, an analyst at researcher IHS Automotive in Lexington, Massachusetts. “They feel like the worst is over and they’re starting to trickle back into showrooms.”

GM, the largest U.S. automaker, exceeded expectations for a decline of 6.3 percent, the average of three analysts’ estimates, as customers bought more Buick and GMC brand vehicles.

Buick sales climbed 39 percent to 12,569 vehicles, led by a 53 percent increase in deliveries of the Enclave sport-utility vehicle, GM said today. GMC sales gained 30 percent to 33,136.

Ford’s gain topped the 14 percent average estimate of six analysts on record sales of Fusion sedans. Fusion sales gained 29 percent, while F-Series rose 24 percent, pushing deliveries of the pickups past last year’s total in the first 10 months of this year.

“That’s a good harbinger of the economy starting to move forward,” Ken Czubay, Ford’s U.S. sales chief, said on a conference call with analysts. “It’s good to see the industry nudging forward.”

Ford will seek to boost Lincoln sales with more marketing through the end of the year, Czubay said. Lincoln sales rose 1.5 percent in October compared with a 21 percent increase for Ford- brand vehicles.

“Lincoln just isn’t yet playing in the big leagues with legitimate luxury cars,” said Michelle Krebs, an analyst with automotive researcher Edmunds.com. “Lincoln is in neverland right now. It needs new products.”

Ford rose 75 cents, or 5.2 percent, to $15.18 at 4 p.m. in New York Stock Exchange composite trading, the highest closing price since July 28, 2004.

“Ford has been a phenomenal winner for us,” said Frank Ingarra, co-portfolio manager at Novato, California-based Hennessy Advisors Inc., which held 407,700 Ford shares as of Sept. 30. “They were a lot more nimble than their competitors, moved a lot quicker, took out parts of the company they needed to and have reemerged.”

The Federal Reserve said today it will buy an additional $600 billion of Treasuries through June, expanding record stimulus in an effort to boost growth and reduce unemployment. The U.S. economy expanded at a 2 percent annual rate in the third quarter, the Commerce Department reported Oct. 29. The jobless rate is projected to stay above 9 percent through next year.

“We have a recovery with a lot of weight on its back,” said Paul Ballew, chief economist for Nationwide Mutual Insurance Co. in Columbus, Ohio, and a former General Motors Corp. economist. “For vehicle sales to jump a heck of a lot more, it’s going to take stronger growth, job creation and higher levels of confidence than what we’re seeing.”

Chrysler Group LLC’s sales rose 37 percent from a year earlier to 90,137 vehicles. The automaker, based in Auburn Hills, Michigan, posted a 29 percent gain in deliveries of its namesake brand and said sales of its Jeep line more than doubled on higher demand for its redesigned Grand Cherokee SUV. Deliveries of the Ram pickup rose 41 percent to 17,316.

Chrysler was expected to report a 41 percent sales increase, the average estimate of six analysts.

“Most of what we’re seeing from Chrysler is either fleet- and rental-based or incentive-fueled sales, so it’s a bit harder to judge Chrysler,” said Jesse Toprak, vice president of industry trends at Santa Monica, California-based TrueCar.com. “We don’t expect a real recovery in their retail sales until the Fiats start rolling in next year.”

The U.S. auto selling rate has stayed above 11 million since March, according to Autodata, based in Woodcliff Lake, New Jersey. A rate above 12 million would be “a good sign and an indication the fourth quarter will be higher,” George Pipas, Ford’s sales analyst, said yesterday in an interview.

“We feel pretty good about October for the industry overall and for GM in particular,” Don Johnson, GM’s vice president of U.S. sales, said today on a conference call.

GM today said it will raise as much as $10.6 billion in an initial public offering that will reduce the U.S. and Canadian governments’ stakes in the automaker. The company also said it had third-quarter net income attributable to common stockholders of $1.9 billion to $2.1 billion.

Toyota’s U.S. deliveries fell 4.4 percent, the only drop among the top six automakers. The decline was smaller than the 5.6 percent drop estimated by four analysts, on average. Sales of the Corolla decreased 25 percent and the Camry slipped 14 percent.