DaimlerChrysler posted a useful boost in operating profit of EUR1,838m ($US 2.216m) in the third quarter, compared with EUR1,332m in the same period last year.

But the group posted a lower third-quarter net income of EUR755m ($US951m). It said the increase in operating profit was partially offset by higher income tax expenses and financial expenses while last year’s third quarter net income was positively influenced by a tax-free income from the sale of interests in Hyundai Motor.

Earnings per share wereEUR0.74, compared with EUR0.94 in the third quarter of 2004.

DaimlerChrysler increased its worldwide unit sales by 9% to 1.2m vehicles in Q3 2005, also boosting revenues 9% to EUR38.2bn.

The Mercedes Car Group’s third-quarter unit sales of 310,900 vehicles were 6% higher than in 2004. Revenues reached EUR12.5bn (+3%).

Operating profit surpassed the prior-year level at EUR436m (Q3 2004: EUR304m). The better profitability was due mainly to new models and efficiency-improving measures.

Positive effects on earnings from increased unit sales were partially offset by unfavourable model mix due to the S-class model changeover.

The Mercedes-Benz brand increased Q3 unit sales by 10% to 282,100 vehicles. Sales of the recently redesigned A-class soared compared with the prior-year quarter (+125%), while the E-class – with some new engines – increased 3%. Additional sales stimulus is anticipated in the fourth quarter due to the launch of the new S-class and the introduction of the R-class in the United States.

A plan announced at the end of September to axe 8,500 jobs at the Mercedes Car Group in Germany over the next 12 months is expected to achieve much-needed advances in productivity and competitiveness for the group. Most of the anticipated charges of approximately EUR950m are expected to be taken in the fourth quarter of 2005.

Unit sales by the smart brand fell to 28,800 vehicles in the third quarter (Q3 2004: 36,500). During the first nine months of the year, dealers’ inventories were reduced significantly. Third-quarter retail sales amounted to 30,800 vehicles (Q3 2004: 36,000).

In 2005, smart has reduced fixed costs by a quarter while procurement and supply as well as design and some IT functions have been integrated into the Mercedes-Benz organisation.

Chrysler Group’s worldwide third-quarter retail sales increased 13% to 736,200 vehicles. The increase was due to the market success of new products as well as the attractive sales programme for employees extended to all customers in the United States and Canada. Global unit sales (factory shipments) were 12% above the prior-year quarter, totaling 663,400 vehicles.

Revenues rose 12% to EUR12.9bn.

Chrysler posted an improved operating profit of EUR310m in a difficult market environment (Q3 2004: EUR217m). The positive effects were partially offset by a slight negative net pricing.

The Commercial Vehicles Division again increased unit sales in the third quarter to 210,400 vehicles, 9% up on Q3 2004. Revenues rose 15% to EUR10.6bn.

Third-quarter operating profit rose from EUR159m to EUR498m. The result for Q3 2004 was impacted by expenses related to the quality measures and recall campaigns at Mitsubishi Fuso Truck and Bus Corporation (MFTBC).

Unit sales by the Trucks Europe/Latin America business unit (Mercedes-Benz) of 37,000 trucks were slightly higher than in the same quarter last year (+3%). Unit sales by the Trucks NAFTA business unit (Freightliner, Sterling, Thomas Built Buses, Western Star) increased by 22% to 48,300 vehicles, primarily as a result of strong demand for Class 8 heavy-duty trucks. MFTBC increased its unit sales by 6% to 46,000 trucks and 2,200 buses. Sales of 64,200 vehicles by the Vans business unit were 7% higher than in Q3 2004. The DaimlerChrysler Buses business unit sold 9,200 vehicles and chassis, 9% more than in last year’s third quarter.

The Financial Services division posted an operating profit of EUR408m, compared with EUR412m in the prior-year quarter. The stable earnings situation in the third quarter was primarily due to the continuing positive development of risk costs partially offset by a higher level of interest rates, especially in the United States, and lower charges from the involvement in Toll Collect (EUR15m; Q3 2004: EUR119m).

Other Activities achieved a third-quarter operating profit of EUR242m, compared with EUR258m in 2004.

Outlook for full-year 2005

DaimlerChrysler assumes that dynamic growth in demand for passenger cars will continue in the emerging markets, while only slight growth is expected for the markets of North America, Western Europe and Japan.

Global demand for commercial vehicles is expected to further increase in the fourth quarter.

Prospects are still generally positive in the United States, while demand may weaken slightly in Western Europe. The group expects a slight increase in demand for commercial vehicles in Japan, while emerging markets should continue their dynamic development.

In view of further reductions in model lifecycles and continuing over-capacity, DaimlerChrysler does not expect any alleviation of the intensely competitive pressure in the automobile industry.

Compared with 2004, DaimlerChrysler still expects a slight increase in unit sales for full-year 2005.

Earnings guidance for full-year 2005 remains unchanged.