Detroit free press.
Fiat’s second quarter profits fell 55% during the second quarter as industry sales in South America fell and the cost of incentives and product launches in the U.S. hurt the company’s performance.
Sergio Marchionne, CEO of both Fiat and Chrysler, said Chrysler has lost discipline on its incentives in the U.S., partly because it still has a number of older models such as the Jeep Patriot, Jeep Compass and Dodge Caravan that have not been significantly updated for several years.
The automaker is forced to use higher incentives to support the sales of those models, Marchionne said.
“It is something that we obviously intend to remedy,” Marchionne told anaylsts during a conference call today. “I think we need to become a lot more disciplined on the pricing side of this.”
Fiat, Chrysler’s parent company, said it earned a net profit of 197 million euros ($264 million) for the three months ending June 30 compared with 435 million euros ($583 million) for the same period a year ago.
The automaker’s earnings before interest and taxes dropped to 961 euros ($1.3 billion) compared with 1.1 billion for the same period a year ago. The company’s profits dropped sharply even though total sales of cars and trucks increased 2% to 1.18 million.
Despite the profit decline, Fiat said it still expects to earn a profit of 600 million euro to 800 million euro ($800 million to $1.1 billion) for the year and increased its outlook for total sales of cars and trucks.
Marchionne said Fiat and Chrysler now expect to sell 4.7 million cars and trucks this year. Previoulsy, the company said it expected to sell up to 4.6 million cars and trucks.
Achieving that, however, will not be easy, Marchionne said.
“We had a crappy first quarter, a halfway decent second and we need to have outstanding quarters in the third and fourth,” Marchionne said.
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Fiat’s second quarter profits fell 55% during the second quarter as industry sales in South America fell and the cost of incentives and product launches in the U.S. hurt the company’s performance.
Sergio Marchionne, CEO of both Fiat and Chrysler, said Chrysler has lost discipline on its incentives in the U.S., partly because it still has a number of older models such as the Jeep Patriot, Jeep Compass and Dodge Caravan that have not been significantly updated for several years.
The automaker is forced to use higher incentives to support the sales of those models, Marchionne said.
“It is something that we obviously intend to remedy,” Marchionne told anaylsts during a conference call today. “I think we need to become a lot more disciplined on the pricing side of this.”
Fiat, Chrysler’s parent company, said it earned a net profit of 197 million euros ($264 million) for the three months ending June 30 compared with 435 million euros ($583 million) for the same period a year ago.
The automaker’s earnings before interest and taxes dropped to 961 euros ($1.3 billion) compared with 1.1 billion for the same period a year ago. The company’s profits dropped sharply even though total sales of cars and trucks increased 2% to 1.18 million.
Despite the profit decline, Fiat said it still expects to earn a profit of 600 million euro to 800 million euro ($800 million to $1.1 billion) for the year and increased its outlook for total sales of cars and trucks.
Marchionne said Fiat and Chrysler now expect to sell 4.7 million cars and trucks this year. Previoulsy, the company said it expected to sell up to 4.6 million cars and trucks.
Achieving that, however, will not be easy, Marchionne said.
“We had a crappy first quarter, a halfway decent second and we need to have outstanding quarters in the third and fourth,” Marchionne said.
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