Earnings Preview: Chrysler 2Q earnings
DETROIT (AP) — Chrysler appears to have moved on from a disappointing first quarter.
Chrysler's U.S. sales rose faster than the industry average in the April-June period, largely because of booming sales of its highly profitable pickup trucks and SUVs. That should be reflected in its second-quarter earnings coming out Tuesday.
Chrysler's profits slipped 65 percent in the first quarter because it was slow to release updated versions of two of its most popular vehicles: the Ram pickup and Jeep Grand Cherokee. Sales of both vehicles were up just 1 percent during the quarter. Chrysler CEO Sergio Marchionne described the first quarter as a one-off event and urged workers to "just close your eyes and plug your nose and move on from here."
They did. Chrysler's production issues were resolved, and there were plenty of vehicles on the ground in the second quarter. Ram sales rose 30.4 percent over last year, to 92,725, as construction companies and other small businesses raced to replace aging trucks. It was the Ram's best second quarter since 2007. Grand Cherokee sales soared 27 percent to 47,663. The Grand Cherokee, which sold for an average of $40,324 in the U.S. in the second quarter, is one of Chrysler's biggest money makers.
Chrysler, based in Auburn Hills, Mich., still has one weak spot. It halted production of the Jeep Liberty last year and has yet to start selling its replacement, the Jeep Cherokee. Cherokee production began in late June, just as the second quarter ended. So, the new SUV won't impact the company's results until the third quarter.
Here's what to expect when Chrysler, now majority-owned by Italian automaker Fiat SpA, reports second-quarter earnings:
STRONG SALES: Chrysler sold 643,043 cars and trucks worldwide in the second quarter, up 2 percent from the same period a year ago. In the first quarter, sales dropped 5 percent to 574,000.
Sales in the U.S. — Chrysler's largest market by far — rose 10 percent to 479,980 in the April-June period, which was faster than the industry's average increase of 8 percent. U.S. sales were up for the company's Dodge, Fiat, Jeep and Ram brands; only the Chrysler brand, with aging vehicles like the Town and Country minivan, saw sales drop.
HIGHER PRICES: Strong Ram sales helped Chrysler command higher prices for its vehicles in the second quarter, since buyers often load up their trucks with expensive options. U.S. buyers paid an average of $32,005 for a Chrysler vehicle in the second quarter, up 3 percent from a year ago, according to auto pricing company Kelley Blue Book. Ram buyers paid an average of $39,538. Only Dodge saw average prices fall 5 percent to $27,437, as more buyers opted for the smaller, less expensive Dodge Dart.
WHY IT MATTERS: Chrysler hopes to report its eighth straight quarterly profit Tuesday. The company employs 65,535 people worldwide, including 43,785 in the U.S.
LAST YEAR'S QUARTER: Chrysler earned $436 million on revenue of $16.8 billion.