DaimlerChrysler CEO Dieter Zetsche has said the company is sticking to its forecast for an operating profit of more than EUR6bn in 2006, despite lower than expected sales of Chrysler vehicles, according to Reuters.
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Zetsche told the media at a roundtable meeting in Tokyo that the source of the company’s 2006 profit, according to which division it will come from, has had to be adjusted, but that the overall guidance is unchanged.
Chrysler sales in the US were down 15.5% in June and the brand currently has 91 days’ unsold inventory. Year-to-date Chrysler sales are down 5% to 1,129,546 units.
Chrysler has had to introduce the biggest discounts of any car maker this year, according to Reuters. Buying incentives combine employee-level pricing with zero percent financing and a 30-day money-back guarantee.
Consumers are wrestling with the effects of higher petrol prices and other economic uncertainties that are impacting the entire automotive industry, including the Chrysler Group,” said Chrysler sales head Steven Landry. “Products like the Dodge Caliber and the upcoming Jeep Compass along with the [incentive] campaigns are the tools the company will use to build sales momentum.”
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By GlobalDataThe ‘Ask Dr. Z’ advertising campaign is the first time that the company has used the merger of US and German engineering and design skills as a unique selling point, since the merger of Daimler-Benz and Chrysler. The campaign was launched on 1 July 1 and in addition to sales incentives, includes a multi-media campaign inviting consumers to ask Dr. Zetsche about the benefits of DaimlerChrysler vehicles.
As Chrysler Group CEO from 2000-2005, Zetsche coined the phrase “Disciplined Pizzazz” to describe the unique blending of key strengths from Mercedes – engineering and technology – (the “discipline”) with the key strengths of Chrysler – American engineering and styling innovation (the “pizzazz”).
Zetsche told journalists on Wednesday that Chrysler is suffering from the fact that Ford and GM’s troubles are being perceived as common to all of the Big Three US OEMs. He said that high fuel prices were also encouraging consumers to buy Japanese vehicles, which are perceived as more fuel-efficient, although this is not necessarily the case.
Zetsche told Reuters that DaimlerChrysler remains committed to a 7% operating margin in 2007 at Mercedes, and 5% for the Chrysler arm.
Truck margins are also under threat in the truck division. Head Andreas Renschler said the company was using more common engines and platforms, and expanding in fast-growing markets such as India, to improve profitability.
