Chrysler Revs Past GM, Ford

[nsap]

Chrysler's ongoing recovery got another boost Thursday as the automaker reported a fifth consecutive quarterly profit on strong demand for new models, and moved closer to finishing the year in the black with a bigger share of the U.S. auto market.

Chrysler posted a $269 million operating profit in the third quarter, up from $171 million a year ago, outperforming bigger crosstown rivals General Motors Corp. and Ford Motor Co., which both reported losses on auto operations in North America in the quarter.

While Chrysler is now surging thanks to successful products such as the Hemi engine and 300C sedan, it was less than four years ago that the company began cutting 35,000 jobs and said it was in the throes of an "existential crisis."

Chrysler's results helped parent DaimlerChrysler AG swing to a $1.2 billion profit from a $1.9 billion loss last year, despite a sharp drop in earnings at the automaker's Mercedes-Benz luxury car unit.

Still, Chrysler could lose momentum if profit-eroding incentives keep rising across the industry, vehicle stockpiles remain high and fewer new vehicle rollouts next year send buyers to other brands.

CEO Dieter Zetsche acknowledged the challenges, but said Chrysler's winning streak will extend into 2005, as vehicles launched this year hit their stride and new models like the Dodge Charger land in showrooms early next year.

"I feel confident, even in the very competitive environment, about the continuation of our momentum," Zetsche said.

At the end of the quarter, Chrysler had an 83-day supply of vehicles on dealer lots, down from 86 days a year ago, but still higher than the 60- to 70-day stockpile most automakers prefer.

"The inventory level at Chrysler should be a little lower," DaimlerChrysler's Chief Financial Officer Manfred Gentz said in a call with analysts and media. "But it is not dangerous."

Gentz said incentives may rise during the fourth quarter to clear out the extra stock and keep up with other automakers offering ever-deeper discounts.

As inventories rose, Chrysler cut production at a Dodge Durango plant in Newark, Del., and a minivan factory in St. Louis. But the company still expects to rebound from a $637 million loss in 2003 to achieve "considerable positive earnings" in 2004.

Chrysler is also on track to post a full-year market share gain, its first since 1998. Through September, the company's U.S. share was 13 percent, up from 12.8 percent a year ago, according to Autodata Corp.

In contrast, GM and Ford are struggling to gain market share and make money off their core automotive business.

GM's U.S. market share is flat through September at 27.7 percent, and the company's North American automotive operations lost $22 million in the third quarter. Ford's share dropped to 18.4 percent, from 19.5 percent, and the company lost $481 million in North America.

If Chrysler plans to continue growing, it will have to keep coming out with well-styled, well-priced vehicles that keep consumers interested, as it has done this year, said Jim Sourges, an analyst with Capgemini in Detroit. "It's all about new product," he said.

Chrysler has said it will launch 25 new vehicles by the end of 2006. The first nine hit the market this year, including the popular Chrysler 300 sedan. But the automaker plans only three major launches in 2005.

The relative dearth of vehicle debuts contributes to a "high level of uncertainty" about Chrysler's turnaround efforts going forward, Michael Bruynesteyn, an analyst with Prudential Equity Group LLP, said in a research report Thursday.

Zetsche said Chrysler will still have a very young lineup next year. Roughly 70 percent of the company's cars and trucks in showrooms now are 2005 models, he said.

Chrysler's worldwide unit sales rose 3 percent during the third quarter, but revenues fell slightly to $14.3 billion, from $14.5 billion a year ago.

The decline reflects a decrease in factory shipments to dealers, due primarily to lost production related to a model changeover at Chrysler's Jeep Grand Cherokee plant in Detroit.

Chrysler's profits were reduced by $129 million in restructuring charges in the quarter, mostly related to closing a foundry plant in Indianapolis, Zetsche said.

Chrysler won approval to close the plant during national contract talks with the United Auto Workers union last fall and will shut the factory in phases ending in early 2006.

Chrysler's upbeat results helped offset disappointing results at the Mercedes Car Group. Profits for DaimlerChrysler's luxury brand fell sharply to $377 million, from $924 million the year before, amid lower sales, delayed product launches and quality problems.

The smart car brand, which posted lower sales and sopped up marketing dollars for new launches, also continues to drag on Mercedes earnings.


http://www.detnews.com/2004/autosins...a01-319465.htm

[Gixx]

DCX has done it right. Focusing on good products is not enough. Good products need to be on the market right now. I want to love GM cars & trucks. Please GM, make it easier for me.

I ordered a G6 on Sept 29th.....Still no car yet.....can anyone in Orion give an update on G6 production???

[IMPALAon20s]

thats what happens when you build a v8 rwd, aggressively styled sedan, that everyone has been screaming for. GM,build em, and they will come!

[Askani]

The best part of that article is seeing that Mercedes has gone down a substantial amount... As much as I love Chrysler, I wish Mercedes would wallow in their own pool of ineptitude for a long time to come.

[zeobandit]

Good looking cars will do that for you. Way to go, DCX!!!

GM - Are you taking notes?

[barcodedorganic]

it's more then the styling and the V-8 adn RWD

i think a lot of it has to do with the HEMI under the hood they can barely move the V-6 versions of the LX

[tgagneguam]

Sort of makes you wonder when the fourth near-bankruptcy experience within half as many decades will come for Chrysler, huh? These turnarounds never seem to stick for the Company.

[quinnp12]

and DCX pulls a little closer to the top. to bad those germans are holding them back, what with their Smart cars and lack of sales.

And ill say it as well: GM, are you taking notes?

[nsap]

Not to take sides, but I think that GM has good looking products, they just need to improve qaulity and get some breath-taking products like the 300 is.

[Buick61]

The 300, Magnum, Grand Cherokee, PT Cruiser and Ram are all very well done. The Durango is ugly but is the right size and has some marketing pull with the Hemi. The Pacifica just flat out needs more power.

However, the Sebring/Stratus are very very poor vehicles. I've driven them....couldn't wait to return them to the rental place. The Neon is aging fast and the Dakota isn't the most attractive new vehicle offering.

And according to JD power, Chrysler corp (while not the worst, mind you) indicates that they have some improving to do in the quality department.

I'm glad that Chrysler and Nissan are showing what the power of attractive, powerful, and affordable vehicles can do for a company. Hopefully this will spread rapidly.

[AdmiralViscen]

Originally Posted by barcodedorganic

it's more then the styling and the V-8 adn RWD

i think a lot of it has to do with the HEMI under the hood they can barely move the V-6 versions of the LX

50% of sales were of the V6 when it launched, and as the HEMIs became scarce V6 sales took an even greater chunk of the 300 pie.

[mrfunji]

I really don't think this new found fame will last. A few years ago the PT cruiser 'saved' the company. It sold like mad for 1-2 years and then sales tanked. The 300, like the PT Cruiser, is a niche vehicle and will suffer the same fate. Granted a large RWD Sedan is NOT a niche category, but it's the design of the 300 that makes it so vulerable. Once people start seeing these everyday it will become boring and sales will drop.

Other reasons?
1) They can't sell v6 300's (drive be a dealership and see how many are on the lot compared to the Hemis).
2) Hemi sales will lag as soon as gas prices go up next summer (with the recent BP oil news on this site, seems like another gas crisis is inevitable)
3) When quality rankings come out, Chrysler will drop. The 300 has had 4-5 recalls in it's short existance.

[AdmiralViscen]

Sales tanked? It still sells over 100k units a year. See Buick61's topic about it.

And when the 300's exterior becomes boring, its innards will still draw crowds.

[barcodedorganic]

hopefully next summer we'll have a new president to help with the cost of the gas and the MDS will still help push more then a few HEMI's out the door and it's not that they can't sell V6's it's just that people want the hemi it's the top of the line and you can't get the top of the line with out the HEMI i see one about every day and it still makes my head whip around...they get your attention period...

as far as quality rankings are concerned the recalls were for minor things and it was only on the first few thousand that left the factory...so i don't think that will hurt them to much...especially considering that every new vehicle launch under the germans is pushing for quality...chryslers goal is by 2007 to be an industry leader...with the mild short comings of the first few built i'd say they're off to a great start

[mrfunji]

Originally Posted by AdmiralViscen

Sales tanked? It still sells over 100k units a year. See Buick61's topic about it.

And when the 300's exterior becomes boring, its innards will still draw crowds.

They didn't need rebates to sell 100k a year back then. Also, the base price was a few notches about 13k. Chrysler makes pennies on PT Loser's now compared to quarters a few years ago.

I'm not saying people won't still buy the 300, but the interior alone won't draw as many people as the exterior did.

I ordered a G6 on Sept 29th.....Still no car yet.....can anyone in Orion give an update on G6 production???

Hmm I've seen 5 G6's in the past week in upstate NY in about a 2 mile radius. Maybe they sent more to Northeast dealers?