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North American sales power Chrysler to $1.7-billion annual profit

January 30, 2013|By Jerry Hirsch
  • A Chrysler plant in Detroit.
A Chrysler plant in Detroit. (Jeff Kowalsky / EPA )

Helped by the improving U.S. auto market, Chrysler Group said it earned $1.7 billion last year, almost 10 times what it earned in the previous year.

Chrysler was the fastest growing U.S. automaker last year. It sales rose almost 21% -- about five times the rate of its domestic rivals - and its market share rose to 11.4% from 10.7%.

The automaker’s results were helped by big increases in sales of passenger cars.  Sales of its Chrysler 300, for example, almost doubled and Chrysler 200 sedan sales rose 44% last year.   Chrysler also did well with its traditional products such as the Ram pickup truck and the Jeep Grand Cherokee sport utility.

That added up to a 20% annual revenue gain to $65.8 billion.

Chrysler has capitalized on the American auto industry recovery and the slowly improving U.S. economy, said IHS Automotive Analyst Mike Wall.

“Everybody talks about the Grand Cherokee, but the Jeep brand overall is doing very well. Wrangler has really been under the radar in the public eye but is selling very well,” Wall said.

Because it is well positioned in trucks and SUVs, Chrysler should benefit this year from the improving housing market.

“As the housing market comes back truck sales start to grow,” Wall said.

In the fourth quarter, Chrysler’s profit rose 68% to $378 million. The automaker said it expects to earn more than $2 billion this year.

“While we are pleased to have achieved strong financial results in 2012, the enterprise we are crafting is not complete,” said Sergio Marchionne, Chrysler’s chief executive. “The goals we’ve set for the year ahead reflect a common desire by everyone from leadership to the shop floor to succeed and sustain the power of the house we are building.”

Chrysler was the second U.S. automaker to report its full-year profit.

On Tuesday Ford Motor Co. said strong business in North America helped it post a big increase in fourth-quarter profit, excluding a tax adjustment last year, but the automaker is still being hurt by Europe’s economic malaise.

The nation’s second-largest automaker earned $1.6 billion in the latest quarter, up 55% from a year earlier.  For the year, earnings slipped 5% to $5.7 billion.

The results don’t include the effect of 2011 changes in valuation allowance against deferred tax assets, which greatly increased net income last year.

Still, Ford’s North American pretax profit of $8.3 billion for the year was good enough generate profit-sharing payments averaging about $8,300 for about 45,800 eligible U.S. hourly employees.

But the automaker said it suffered an operating loss of $732 million in Europe in the latest quarter, almost four times the size of its loss a year earlier.  The company lost almost $1.8 billion in the region for the full year, compared to a slight loss of $27 million in 2011.

Although Chrysler Group is controlled by Italian automaker Fiat, it doesn’t have the same level of international sales as Ford and is largely protected from the problems in Europe.  Instead, it has become a steady source of profits for Fiat.

“They have nowhere near the exposure on Europe and that’s the problem spot for the auto industry right now,” Wall said.


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