Chrysler’s first-quarter profits dip, expenses for new models rise
Chrysler Group said Monday that its first-quarter profit fell 65% to $166 million.
The automaker’s earnings were hurt by higher expenses to launch new models and slower business in Europe and South America. Revenue fell 6% to $15.4 billion compared with the same quarter a year earlier.
Chrysler attributed much of the decline to the cost and the slow launch of “key” products, including new models of its Ram pickup trucks and the 2014 Jeep Grand Cherokee. It also invested heavily in the second-quarter production launch of an all-new Jeep Cherokee.
The automaker said that the expenses will “position the company for a strong performance in the second half of 2013.”
Chrysler also noted that the first-quarter results marked its seventh consecutive quarter of positive net income.
“We remain on track to achieve our business targets, even as the first-quarter results were affected by an aggressive product launch schedule,” said Sergio Marchionne, chief executive of Chrysler and Fiat, the Italian automaker.
Fiat owns 58.5% of Chrysler, acquired through a series of agreements that started with the Detroit automaker’s bankruptcy restructuring and federal government bailout in 2009.
Marchionne has said Fiat expects to acquire the remaining shares of Chrysler, currently owned by a United Autoworkers Union trust. The two sides are in litigation in Delaware over the price Fiat must pay for Chrysler’s remaining shares.
Meanwhile, Turin, Italy-based Fiat said Monday that had a first-quarter loss of 83 million euros ($108 million.)
Fiat has been hurt by the economic slump in Europe, especially in Italy and its other major markets.
European new car sales fell 10% during the first quarter of this year to 2.9 million, compared with 3.3 million a year earlier, the European automakers association ACEA reported earlier this month. Automakers have now seen European sales fall for 18 consecutive months.
Without the earnings contribution from Chrysler and the healthy North American auto market, Fiat’s financial performance would have been worse, analysts said.
“Who would’ve guessed five years ago when Fiat rode to the rescue of a then-bankrupt Chrysler that Chrysler would be viewed as the savior of Fiat?” said Jack Nerad, analyst at auto information company Kelley Blue Book. “But that’s exactly how the tables have turned.”
Last week, Ford Motor Co. said its first-quarter profit rose more than 15%, helped by record earnings in North America and a strong performance by its auto financing arm.
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