By on July 31, 2013

2013-07-30T160847Z_1_CBRE96T18UU00_RTROPTP_2_AUTOS-CHRYSLER-TOLEDO

Chrysler Group reported net income of $507 million in the second quarter, with strong sales of SUVs and pickup trucks helping the car company make a profit for the eighth consecutive quarter. Earnings were up 16% from the same period a year earlier when $436 million was made. However, the company reduced its projected full year profit. Second-quarter revenues grew 7 percent to $18 billion, up from $16.8 billion in 2012.

U.S. sales were up almost 10%, bettering the industry average of  8 percent, to 479,980. All the company’s brands but Chrysler had improved sales.

“I think the (U.S.) market is holding up well and Chrysler is holding up well in that market,” CEO Sergio Marchionne told analysts Tueday morning, according to a report by Automotive News.

Sales will be reported on Thursday and Chrysler is expected to post its 40th straight month of year to year sales gains.

The company lowered forecast of net income for the full year from $2.2 billion to somewhere between $1.7 and $2.2 billion. Modified operating profit projections were also lowered from $3.8 billion to between $3.3 and $3.8 billion.

A charge of $151 million to cover the voluntary recall of Jeep models to settle a dispute over rear end collision safety with the U.S. National Highway Traffic and Safety Administration.

For the first half of the year, U.S. sales were up 9 percent, to 908,332, gaining Chrysler 0.1% of market share to 11.6%.

CFO Richard Palmer said Chrysler was reducing its earnings expectations for the year due to the cost of the NHTSA campaign and issues with suppliers that have affected production.

“We’ve had issues at most of our plants trying to keep up with demand,” Marchionne said. “We’ve lost volumes on a steady basis,” from supply issues.

The new Jeep Cherokee’s success is considered critical by Marchionne. Several thousand assembled Cherokees have been held back from dealers as the company fine tunes the powertrain software. A second shift of Cherokee production at the  Toledo North plant will begin August 19th. Jeep has also postponed the media launch of the Cherokee due to this matter, an unprecedented move by an automaker.

“The second half is not doable without a proper launch of the Cherokee. We’ve been without a car in that segment for about a year, and we’re paying a huge price for not having the Liberty,” Marchionne said.

Marchionne also said that CAFE standards will force Chrysler to develop new powertrains for its Jeep brand, hinting at diesel engines and 8 speed transmissions for Jeeps. He also reassured UAW workers that Jeeps will continue to be imported from Toledo.

“But the last thing I want to do is to ever ever stop the Toledo plant from making Wranglers,” Marchionne said, “We need to find a way to introduce the changes without stopping production in that plant.”

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12 Comments on “Chrysler Profit For Q2 Up 16% to $507 Million, Full Year Forecast Reduced...”


  • avatar

    Good news for Chrysler / Fiat. I’m not surprised, as they’ve turned out some very capable new models (Dart notwithstanding) and done relevant and extensive refreshes on the Avenger / 200 and minivans. I hope the new Cherokee performs very well, as I think it’s looks are off-putting to some. I’ll look to test one as soon as I can.

  • avatar
    Hummer

    Wish you guys wouldn’t post so many articles at once, anyways…

    I’m glad to hear Chrysler finally giving the others some competition, its very nice to see, I’m concerned however about the changes to the wrangler, its selling well with only small changes every now and again. Doing major changes as I fear may be happening could kill its monopoly.

    Trying to extract fuel economy from something that was not built with that in mind, is a recipe for disaster. Instead I would like to see a V8 option.

    I know a guy with a 78? With a 360 out of a woody wagon, and 3 speed manual, beautiful truck with only 5k miles on the body, its so much fun to drive that truck, it sounds amazing.

  • avatar
    CoreyDL

    I was so distracted by how hideous that Cherokee is at the front that I forgot to focus on all the facts and figures in the article. What’ll happen with this model is they’ll sell a few, realize the exterior design is bogus, do a quick refresh, and the first two years of the model will wear a dated “pre-facelift” face. They’ll be worth much less down the line.

  • avatar
    Lie2me

    I wanted to buy a new Cherokee, I kind of like the way it looks and in theory it could really shine in it’s segment, but I got tired of waiting and waiting. Now with lowered forecasts and more delays, if and when it launches, is anyone going to care?

  • avatar
    mikey

    I believe that Sergio Marchionne can take his place beside Lee Iacoccas one of the great leaders in the modern auto industry.

    With some help from the taxpayers,both men managed to pull Chrysler out of the ditch.

    • 0 avatar
      rpol35

      “With some help from the taxpayers,both men managed to pull Chrysler out of the ditch”

      Mikey – That’s not exactly the case with Iacocca. He got the U.S. Treasury to guarantee bank loans but he never took any money from U.S. taxpayers (don’t know about Canada.) Chrysler posted worthless stock warrants as collateral and after the company regained its health, and paid the loans off several years early, the Treasury sold the warrants and made $MM’s. Treasury assistance? yes; taxpayer assistance (circa 1981)? no.

      I do certainly agree with your assertion that Iacocca is one of the great leaders of the modern auto industry.

      • 0 avatar
        mikey

        Oh yeah, for sure,in 81-82 Iacocca managed to get Chrysler back on its feet,and the taxpayer came out ahead.

        This time around the taxpayer took a little beating. This has been the subject of much debate here.

        I am the numero uno Fan Boy when it comes to the domestics/UAW/CAW plants. The eternal optimist! So to speak.

        I didn’t think Chrysler was going to make it into 2010. For the brothers, and sisters that still have a job, I’m so glad I was wrong. That and I’m more than greatfull for the help from the tax payers in both countries.

  • avatar
    donnyindelaware

    I wish they would make the Chrysler brand more luxurious.


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