DaimlerChrysler’s US Chrysler unit is cutting second-half retail shipments to dealers by 16% due to lower sales of pickups and sport-utility vehicles.
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The automaker plans to ship about 705,000 Chrysler, Jeep and Dodge vehicles in the second half for retail sale, compared with about 840,000 for the same period a year earlier, Chrysler spokeswoman Shawn Morgan told Bloomberg News.
“We were hoping that we could find our way out of this situation by continuously reducing our production, but not significantly, and increasing our sales,” DaimlerChrysler chief executive officer Dieter Zetsche reportedly said in a conference call with analysts on Tuesday (19 September).“The reality is that we fell short of those plans, and relatively significantly.”
The news agency noted that Zetsche, who ran the US unit in Detroit for five years, last week announced that parent DaimlerChrysler would miss a profits target because of a projected $US1.5bn third-quarter loss at Chrysler. He is also reorganising Mercedes-Benz, boosting quality and firing 8,500 assembly line workers to reach a profit margin goal of 7% by next year.
According to Bloomberg News, third-quarter Chrysler retail shipments are estimated at 290,000, a 90,000-unit reduction from the previous plan. Slides prepared for Zetsche’s presentation didn’t give full production figures, which include vehicles sold to corporate and government fleets. Retail shipments in the third quarter of 2005 were 443,000, Morgan reportedly said.
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By GlobalDataBloomberg News said the cuts focus on high-margin light trucks, including SUVs, according to the slides. Chrysler’s inventory of unsold vehicles should be in the low 500,000 range at the end of the year, according to the slides.
“There are certainly risks that there could be another profit warning before the end of the year,” Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt, told the news agency. “It was only six or seven weeks ago that they said Chrysler would report a loss this quarter.”
Zetsche has already announced 15,000 job cuts, including those at Mercedes, reduced a stake in the European Aeronautic, Defence & Space Co. [or EADS, a part owner of aircraft maker Airbus] and eliminated an unsuccessful model at the Smart division, Bloomberg News noted.
The report added that Chrysler’s US sales, after a 4.5% increase in 2005, fell 9.7% for the year to the end of August as demand for large Dodge pickup trucks, SUVs and minivans fell. The only increases were for Chrysler 300 and Dodge Charger sedans, Chrysler PT Cruiser compact sports wagons and the Dodge Sprinter commercial van.
DaimlerChrysler, including Mercedes, lost its No. 3 position in the US sales tables to Toyota earlier this year, Bloomberg News said.
