Chrysler on downward spiral
DaimlerChrysler is following the downward spiral of declining sales of pickup trucks and sport-utility vehicles and is planning to cut second-half dealer shipments by 15 percent at the U.S. based Chrysler unit. The automaker has been haggard, as U.S. gasoline prices topped $3 a gallon this summer and it is most dependent on trucks.
“Unlike larger rivals General Motors Corp. and Ford Motor Co., which started cutting production early this year, Chrysler Group kept building and was stashing cars and trucks on lots all around southeast Michigan, even as sales were declining” said analyst George Peterson of market research firm AutoPacific in Tustin. “And on the truck side, rising fuel prices hurt the company through the summer,” he added.
“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,'' Dieter Zetsche, chief executive of DaimlerChrysler, said. “The reality is that we fell short of those plans, and relatively significantly.''
The success of cars such as the new Dodge Caliber compact, the sporty Chrysler 300 and Dodge Charger sedans gave positive signals and made Chrysler predict in January, that it would be boosting production this year but after the dramatic reductions the automaker plans to deliver about 200,000 to 210,000 vehicles below the year-earlier total.
Dieter Zetsche, from company headquarters in Stuttgart, said: "There's no way around but saying we were too optimistic."
DaimlerChrysler had announced last week, that it would fall short of its earnings target this year, as in the midst of slumping sales the U.S. group would lose $1.52 billion in the third quarter.
A wide gap would be seen in Chrysler’s product line-up as it slashes down the supply of slow-selling pickup trucks and sport utility vehicles and makes an attempt to introduce smaller, more fuel-efficient vehicles.
Chrysler Group's chief executive, Tom LaSorda said, “The company will furlough thousands of employees for short periods as it trims production the remainder of the year and executives are looking at the entire business model to determine if there's further action beyond that.”
The U.S. shares of DaimlerChrysler have dropped 3.4 percent this year. They went up 11 cents to $49.29 in New York Stock Exchange composite trading.
