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VOL. 37 | NO. 30 | Friday, July 26, 2013
Chrysler's 2Q net income up 16 percent on US sales
DETROIT (AP) — Chrysler Group's sales picked up in the second quarter thanks to strong U.S. demand for trucks and SUVs, but the company still cut its full-year sales and profit targets after a slower than expected start to the year.
Chrysler said Tuesday that its net income rose 16 percent to $507 million in the April-June period from $436 million a year ago. It was Chrysler's eighth straight quarterly profit.
Chrysler sold 643,000 vehicles worldwide in the second quarter, up 10 percent from a year ago. Sales were also up 10 percent in the U.S., where Chrysler sells 75 percent of its vehicles. Chrysler's U.S. sales rose faster than the industry average of 8 percent in the second quarter.
Revenue was up 7 percent to $18 billion from $16.8 billion.
Chrysler said it now expects to ship 2.6 million vehicles worldwide in 2013, at the low end of its target of between 2.6 million and 2.7 million. It expects to earn between $1.7 billion and $2.2 billion, down from its previous target of around $2.2 billion.
Chrysler's first-quarter figures suffered because it was slow to release new versions of the Ram pickup and Jeep Grand Cherokee SUV, two of its most popular vehicles. Chrysler CEO Sergio Marchionne described the first quarter as a one-off event and urged workers to "just close your eyes and plug your nose and move on from here."
Chrysler's production issues were resolved and there were plenty of vehicles on the ground in the second quarter. U.S. Ram sales rose 30.4 percent over last year as construction companies and other small businesses raced to replace aging trucks. It was the Ram's best second quarter since 2007.
Grand Cherokee sales soared 27 percent to 47,663. The Grand Cherokee is one of Chrysler's biggest money makers. U.S. buyers paid an average of $40,294 for a Grand Cherokee in the second quarter, up 9 percent from a year ago, according to car pricing site Kelley Blue Book.
U.S. sales were up for the company's Dodge, Fiat, Jeep and Ram brands; only the Chrysler brand, with aging vehicles like the Town and Country minivan, saw sales drop.
Chrysler took a $151 million charge in the second quarter for the recall of 1.56 million older model Jeep Libertys and Grand Cherokees. Dealers are installing trailer hitches on vehicles made between 2002 and 2007 to mitigate the risk of a fire after a rear-end crash. Dealers are also inspecting another 1.2 million Grand Cherokees from the 1999 to 2004 model years to make sure their hitches are on safely.
Chrysler initially defied the government's order to recall the vehicles, but reached a compromise with the government in mid-June.
In the second half of this year, Chrysler should get a boost from the release of the new Jeep Cherokee, which started rolling off the line in Toledo, Ohio, last month. The Cherokee replaces the Liberty, which was phased out last year.
"Chrysler Group is poised for a very strong performance in the second half of the year," Marchionne said Tuesday in a statement.
Chrysler is majority owned by Italian automaker Fiat SpA, which said Tuesday it earned $188 million in the second quarter. Without Chrysler, Fiat would have lost $327 million as its European sales dropped 5 percent.