Chrysler Strength Makes Up for Fiat Weakness
Today, Chrysler reported its first yearly profit since 1997. It was $183 million net profit on $55 billion net revenue. Not earth shattering as car companies go, but a start: Chrysler wants to turn this into $1.5 billion of net profit in 2012 and $65 billion of revenue. At the same time, Fiat-Chrysler cut its 2012 revenue target to 75 billion, due to a slowing demand for cars in a weakening European economy. Fiat will not pay a dividend for ordinary shares in 2011.
According to Reuters, “Chrysler’s strength offset Fiat Group Automobiles (the grouping of Fiat, Lancia and Alfa Romeo brands) weakness.”
Says Michelle Krebs of Edmunds:
“Chrysler is the surprising comeback kid — again. When Chrysler emerged from bankruptcy, there were plenty of skeptics, but the automaker has proven them wrong. Since detailing its plan for the future in November 2009, Chrysler has done everything it said it would, creating an impressive recent track record and providing confidence that it will meet its 2012 goals.”
Krebs explains the math behind Chrysler’s good numbers:
“Chrysler’s incentives spend was among the lowest in the fourth quarter of any time in the past two years, and its average transaction price was the highest in at least two years (maybe ever) at $30,603. All of this as vehicle sales soared 35 percent from the 2010 fourth quarter.“
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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- Steve Biro I don’t bother with dedicated summer or winter tires. I have no place to store them. But the newest all-weather tires (with the three-peak mountain symbol) are remarkably good year-round. The best of them offer 90 percent of the performance of winter tires and still fall mid-pack among summer ultra-high performance tires. That’s more than enough for my location in New Jersey.
- Carfan94 Never, it doesn’t get cold eneough here in TN, to switch to winter tires. But it gets cold enough that running Summer tires year round is impractical. I’m happy with my All seasons
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If I could walk away from all my debt and contracts, I'd turn a short-term profit too. It is all about product. Jeep is a crown jewel but its heyday has passed with low-efficiency SUVs on the wane. Ram is solid with some conquest opportunities. But the Dodge and Chrysler lines, though improved, are still industry laggards. In a relatively flat market with VW, Hyundai/Kia and Nissan on the rise, it has to come out of someone's hide. It'll be weaklings like Chrysler. How does the Dart compete with 25-year franchises like Civic, Corolla, Focus, Elantra, et al? The 200 against Camry, Accord, Malibu, Fusion, Sonata? That's a 5-year uphill battle, even if the product is totally fantastic (which it isn't, at best it is competitive). I'm not liking Chrysler's long term prospects.
At that profit rate, if your corner pizza parlor sold $1,000,000 in a year, they make $3327.27. 'Nuff said.