Chrysler Group has reported net income for the first quarter down 65% at US$166m, blaming the timing of changeovers on key models as well as slower sales in Europe and Latin America. The results were worse than expected.
Chrysler revenue for the quarter decreased 6% to US$15.4bn. The reduction was primarily attributable to lower shipments in the quarter due to the end of Jeep Liberty production in 2012 in preparation for the 2014 Jeep Cherokee production launch in the second quarter, and the ongoing launches of the new 2014 Jeep Grand Cherokee and 2013 Ram Heavy Duty trucks. In addition, international shipments declined year-over-year due to continued economic weakness in Europe and import restrictions in Latin America.
Chrysler noted that the product actions that dented revenue and profits in Q1 'are expected to position the company for a strong performance in the second half of 2013'.
Chrysler stressed that the first quarter results mark the company’s seventh consecutive quarter of positive net income, reflecting continued improvements in product acceptance, pricing discipline, and market share. Retail sales in North America stayed strong.
“We remain on track to achieve our business targets, even as the first quarter results were affected by an aggressive product launch schedule,” said Chrysler Group LLC Chairman and CEO Sergio Marchionne. “This quarter underscores the importance of an unwavering commitment to execute flawless vehicle introductions to reach our full potential. While the task ahead this year is daunting, we remain committed to our overall targets, including a minimum shipment increase of 8 percent and a Modified Operating Profit of US$3.8bn.”
Chrysler said that worldwide vehicle shipments were 574,000 for the quarter, down from 607,000 a year ago, principally due to 31,000 fewer Jeep Liberty shipments as production ceased during 2012 in preparation for the production launch of the Jeep Cherokee in the second quarter.
However, strong worldwide vehicle sales for the first quarter of 563,000, up 8% from a year ago, were driven primarily by a 12% increase in US retail sales.