Chrysler reported a $690 million loss in the first quarter of 2014. This loss was associated with payments Fiat had to make to acquire a 41.5% stake in Chrysler and compete the Fiat-Chrysler merger. The charges totaled $1.2 billion in order to extinguish debts as well as finance payments to a health care trust for retired auto workers. The deal allowed for Fiat to take full ownership of Chrysler.
Without the charges Chrysler said it would have earned a first quarter 2014 profit of $486 million compared to the first quarter profit in 2013 of $166 million. Chrysler also reported a 23% increase in revenue from Q1 2013 to Q1 2014, as well as their market share increasing from 11.4% to 12.5%. The increased sales and market share are due to Chrysler’s expansion in emerging markets as well as the success of their new models. There have been very strong sales numbers in Chrysler’s pickup trucks and sports utility vehicles, specifically the Jeep products.
Chrysler is definitely growing and increasing their profits. They are expanding into countries throughout Pacific Asia (specifically targeting India) and have just unveiled their new business plan, which looks to place an increased focus on improving the brand. These improvements are definitely mirrored in the Consumer market, where in the first quarter of 2014 new Jeep cars sold very well. It’ll be interesting to see if Chrysler’s growth is restricted at all by some of the Fiat brands. Chrysler and Jeep are two very successful brands, but it will be interesting to see if the added weight of Fiat brands like Maserati, Alfa Romeo, and Ferrari, which are not as successful, will restrict the growth of Fiat-Chrysler.
Chrysler, under the leadership of Sergio Marchionne, certainly has the potential to resurrect what was once a revered brand in the U.S. What Bill Cosgrove said, however, seems to ring true. The auto industry is cyclical, and I have to imagine that Chrysler will find itself in a down cycle before too long. It will be interesting to see how they cope with this.
Absolutely. The two new Jeep models just released at the Beijing Auto Show have raised interest for the company across the Asia/Pacific market. It’s most likely that we will see an increase in profits for Chrysler in the next few years, especially when they get this stuff with Fiat figured out.
It is interesting to see this report after they announced that their very optimistic five year plan. Chrysler will have to work hard on their new models to achieve their goals for 2018
Surprisingly we are now starting to hear about more companies pursing profits in India. Considering India’s market dropped in 2013 and has seen no increase in 2014, is drawing so much attention. It may be because from 2002 to 2012 their market saw a 14% increase. Economists are expecting India to see at least a 10% increase over the next decade.
I don’t see this large loss as something posing an risk to the key operations of the Chrysler business. Further, the earnings that would have occurred without the large loss were significantly higher year of year than previously. As long as the core business of Chrysler is growing and its operations are expanding into new markets, I think that the future may still be bright for this company.