Chrysler back in the black
BY RON HAMMERTON | 3rd May 2011
Propped up by United States and Canadian taxpayers and new owner Fiat, Chrysler posted a net profit of $US116 million ($A106m) in the first quarter of this year, compared with a first-quarter loss of $US197 million ($A180m) in 2010.
Chrysler’s success impressed analysts, but was modest compared with cross-town rival Ford which last week announced a $US2.6 billion ($A2.4b) net profit – its best quarterly performance in 12 years.
The other Detroit ‘Big Three’ company, General Motors, is also expected to post large numbers in the black when it announces its figures later this week.
Chrysler’s profit was made on net revenues of $US13.1 billion – up 35 per cent on the first quarter of last year when it revealed just $9.7 billion in sales.
Global sales of Chrysler, Dodge, Ram and Jeep vehicles were up 18 per cent year on year to 394,000 units.
In the key US market, sales were up 23 per cent, outpacing the market rise of 20 per cent.
Among the company’s hits were the new Jeep Grand Cherokee, Ram pick-up and Chrysler 200 mid-sized car, although some vehicles remain in short supply in showrooms.
Chrysler Group CEO Sergio Marchionne attributed the improved sales and financial performance to the company’s rejuvenated product lineup, which he said was gaining momentum in the marketplace and resonating with customers.
“These results are a testament to the hard work and dedication of our employees, suppliers and dealers, all of whom are helping Chrysler create a new corporate culture built on the quality of our products and processes, and simple, sound management principles,” he said.
“We remain focused on delivering great products to our customers and continuing to achieve the sales and financial targets outlined in our 2010-2014 business plan.”While Chrysler’s cash situation improved to $9.9 billion, its gross debt increased from $13.1 billion to $13.2 billion.
Last week, Chrysler announced it would repay its US and Canadian rescue loans via new commercial borrowings.
In the first quarter, Chrysler paid $348 million in interest on its loans, some of which carry crippling interest rates of up to 20 per cent.
Fiat, which raised its stake in Chrysler to 30 per cent last month, is set to take a controlling 51 per cent slice once Chrysler has repaid the government loans and met other criteria.
Chrysler Group has pledged to cut fuel consumption by an average of 25 per cent across its range over the next three years, mostly by favouring four-cylinder and diesel engines across its line-up.
The company announced plans to lift group four-cylinder sales share from the current 19 per cent to 38 per cent by 2014, while also advancing diesel sales from nine per cent to 14 per cent. These gains will come at the expense of V8 and six-cylinder sales.
It says other fuel savings would come from a roll-out of Fiat-derived technologies including MultiAir, direct injection, turbo-charging, CNG and idle-stop.
Chrysler has reconfirmed its positive guidance for the remainder of 2011, saying the company has a number of new models on the launching pad.
These include a new diesel and SRT8 versions of the Jeep Grand Cherokee, the new Jeep Compass with diesel and petrol engine options, and the new 2012 Fiat 500 Cabrio.
