Blog: Free newsletters
Dave Leggett | 5 June 2003
This is an extract from this week's 'Editor's Weekly Highlights' newsletter, sent out yesterday:
Two items in the news today have a connection that is a little disturbing. Firstly, we have the news that US light vehicle sales in May appear surprisingly positive. Against last year’s figure, May 2003 was 4.4% up according to Ward’s. The domestics even managed year-on-year increases in the month. On the face of it, that looks like a pretty good result.
But is it? (Said in true Jeremy Clarkson there’s-a-big-twist-coming style.)
You see, perhaps we shouldn’t be too overjoyed that market volume in the US is defying some of the more gloomy forecasts that have been around lately. Maybe things aren’t quite that simple.
Late yesterday, DaimlerChrysler issued a fairly dramatic profit warning over expected Q2 results. DC warned that its Chrysler unit is facing a one billion euro operating loss in the second quarter of this year. That’s sizeable.
Today, the markets reacted predictably and the DC share price headed south in a big way. The deterioration in performance even threatens to derail the three-year turnaround plan for Chrysler. This could be serious and begs the question, what will the reaction in Stuttgart be?
The scale of the loss also seems to have come as something of a shock to analysts. And the cause of the gloomy Chrysler assessment? DC blamed the impact of the ongoing price war and incentives in the US.
For the industry, the simple truth seems to be this: you can have the volume, keep the metal rolling, but at what price?
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