Behind the Wheel with Phil Lebeau

Chrysler IPO: What investors need to know

Chrysler files for an IPO

After months of negotiating for a way to buy the 41 percent of Chrysler that Fiat doesn't currently own, CEO Sergio Marchionne is hoping an IPO will move the process forward.

Late Monday, Chrysler and the UAW VEBA Trust filed papers for an initial public offering to sell a small percentage of the company to the public.

The broader media will focus on how far Chrysler has come since it went through bankruptcy four years ago. Without a doubt, this is a far different company. It's profitable, growing and has a clear vision of what it hopes to achieve over the next several years.

(Read more: Chrysler IPO to bring shareholder battle to a head)

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As Sergio Marchionne has said numerous times, Chrysler is no longer a company filled with employees worried about losing their job. Today, Chrysler is charging forward.

This IPO highlights some weaknesses and strengths of Chrysler that investors should keep in mind as they consider some day buying Chrysler stock.

This is a North American company

Chrysler has long been the one automaker in the Big 3 that has failed to invest and grow sales around the world. While Sergio Marchionne and his team are targeting greater growth overseas, especially in China, this is a company that relies on the U.S. and Canada for 86 percent of its total sales. Fortunately, the U.S. market has been red hot over the last three years and the demand for new vehicles has been strongest with trucks and SUVs, the two types of vehicles that are a strength for Chrysler.

Meanwhile, Chrysler is woefully short of both products and production in both Europe and China. China is a particular weak spot. Marchionne has plans to expand the Jeep brand in China, but it has been slow in developing. Realistically, it will take 3-4 years before we see China become a legitimate growth market for Chrysler. When that happens, the Jeep brand is in a perfect position to soar in that market.

Jeep is a sleeping giant

Talk with executives at GM, Ford, or any other automaker about that one part of Chrysler they covet, and almost all of them will say it is the Jeep brand. It's a sleeping giant. Last year, Jeep global sales more than doubled but most of that growth was in North America. In the rest of the world Jeep has little presence, but great brand recognition. Chrysler has plans to eventually build Jeep models in China to be sold in China. Why? The Chinese will likely snap up the SUV with an All-American name and the kind of aggressive styling that will work in that country.

Thirty-one percent of Chrysler's global sales are Jeep models and that will surely grow.

Fiat, the parent with issues

Make no mistake, the main reason Fiat wants to buy all of Chrysler is to have the free cash flow of the American automaker. Fiat needs Chrysler cash to help it further expand. The European automaker is still wrestling with a weak market in Europe and too much capacity in that continent. The global auto game in 2013 is all about being balanced around the world. Right now, Fiat skews heavily toward Europe with a strong position in Latin America and relatively little in Asia. Eventually, Fiat wants and needs to shore-up that weak position in Asia. That would be much easier if it owns all of Chrysler.

—By CNBC's Phil LeBeau. Follow him on Twitter @LeBeauCarNews.

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