Chrysler, America's third largest carmaker, saw third-quarter profits decline 46 per cent from a year ago as the cost of new launches mounted.
The company, under fire from potential bidder Kirk Kerkorian to improve shareholder value, did not help its case by reporting earnings down from $651m to $354m. The profits translated to 91 cents a share, compared with $1.76 in the third quarter of 1994.
Chrysler said profits were lower mainly due to reduced production of minivans during the changeover to a new model, costs related to the minivan, higher rebates and other buyer incentives, and the deterioration of the Mexican economy.
Traditionally, third quarters are troughs for America's big three carmakers because of the cost of model changeovers, vacation-slowed production and slower summer sales.
Chrysler's profits grew from the second quarter to the third, and July- September was the third-best third quarter in company history, Robert Eaton, the chairman, said. "Customer response to our new minivans has been outstanding, and we expect to be near full minivan production capacity by the end of the fourth quarter."
Chrysler's revenue for the quarter rose to $12bn from $11.7bn in the same 1994 period. In the first nine months, Chrysler profits have fallen to $1.08bn, or $2.82 a share, from $2.5bn, or $6.92 a share, in the same 1994 period. Revenue was relatively flat at $38.1bn, against $38bn a year ago.
Chrysler, which has been linked with a possible tie-up with Sweden's Volvo, achieved combined sales in the US and Canada of 560,000 vehicles in the quarter, a market share of 13.6 per cent, up 0.1 per cent.
Internationally, Chrysler's retail sales for the third quarter totalled 40,120 units, up 27 per cent over the 1994 period. Chrysler sold 21,918 vehicles in Europe in the third quarter, an increase of 36 per cent over the same period in 1994.
The automaker approved an increase in its common stock repurchase programme during the quarter, from $1bn to $2bn to be completed by the end of 1996. It said that through the first nine months it repurchased 17.4 million shares of its common stock at a cost of $782m.
The US's biggest carmaker, General Motors, reports profits on Tuesday, when it is also expected to show a year-on-year fall. Along with Ford, the big three's combined third-quarter profits are likely to total about $1.2bn, down from about $2.3bn a year ago.Reuse content