Tag Archive | "Chrysler"

Sales Pace at 14.18 Million in January


Retail sales rose 11.4 percent in January, with the industry pacing at a 14.18 million seasonally adjusted annual sales rate — the highest rate since the government’s Cash for Clunkers program in August 2009, according to AutoData.

Toyota was the comeback kid, experiencing a 7.5 percent gain from a year ago after suffering through months of declines due to production issues caused by last year’s disasters in Japan and Thailand. At the top of the sales board were Chrysler Group and Volkswagen of America Inc., both brands registering double-digit increases. Mercedes-Benz rounded out January’s top three thanks to strong demand for its SUV and passenger car lineup.

Audi: Audi of America sold 9,354 vehicles in January, a 19.7 percent year-over-year increase from January 2011. The company’s performance marked the best January in Audi of America’s history. Sales of the Audi A6 increased 90 percent over 2011, sales of the Audi Q7 increased 15 percent, and sales of the Audi A7 totaled 643 vehicles.

BMW/MINI: BMW Group reported January sales of 19,739 vehicles, an increase of 5.8 percent from the year-ago month. Sales of BMW brand vehicles increased 3.1 percent from last January to 16,405. The best performing vehicles included the X3 SAV, up 56.9 percent to 1,687 units; the 6 Series, up 392.8 percent to 409 units; and the 7 Series, up 56.1 percent to 977 units. MINI USA reported sales of 3,334 automobiles in January, an increase of 21.2 percent from the 2,751 sold in January 2011.

Chrysler: Chrysler Group LLC sold 101,149 units in January, a 44 percent increase vs. January 2011 (70,118 units). The performance marked the group’s best January since 2008. The Chrysler, Jeep, Dodge and Ram Truck brands all posted sales gains, led by the Chrysler brand’s 81 percent increase. The group’s 44 percent increase was driven in large part by strong sales of the Chrysler 300, Chrysler 200, and Dodge Charger and Avenger sedans.

Ford: Ford Motor Company sold 136,710 vehicles in January, a 7 percent gain compared with January 2011. Retail sales increased 8 percent. Focus sales were up 60 percent, marking the best January for the model since 2003. Ford brand sales totaled 131,589 vehicles in January, marking the best January sales month for Ford brand since 2008.

GM: General Motors Company sold 167,962 vehicles in January, a 6 percent decrease vs. January 2011. GM’s total passenger car sales increased 3 percent in January, led by a 30-percent increase in sales of fuel-efficient, small and compact cars. The company’s crossover sales decreased 18 percent, and sales of trucks, which include full-size pickups, vans and SUVs, decreased 6 percent. Retail deliveries declined 15 percent year over year.

Honda/Acura: American Honda Motor Co. sold 83,009 in the U.S. in January, an increase of 8.8 percent over January 2011. The Honda Division posted sales of 74,628, an increase of 9.3 percent year over year. Civic sales increased 49.5 percent. The Accord posted sales of 13,659, up 1.5 percent from the same period last year. Acura Division’s January sales totaled 8,381 units, up 5.3 percent year over year.

Hyundai: Hyundai Motor America announced an all-time record January with sales of 42,694 units, up 15 percent vs. 2011. January retail sales were up 19 percent, led by a 13 percent increase in Elantra sales and a 27 percent increase in Genesis/Equus sales.

Mazda: Mazda North American Operations reported its best January since 1994 with U.S. sales of 23,996 vehicles, a 68.2 percent increase vs. last year. Mazda3 sales totaled 9,200 units, an 83.4 percent increase vs. last year. This was the model’s best-ever January. Mazda CX-7 and CX-9 crossover SUV sales were up 32.6 percent and 1.6 percent, respectively, marking the best-ever January for both vehicles.

Mercedes-Benz: Mercedes-Benz USA posted a 25.8 percent increase in January, with 21,726 vehicles sold. This was the best January in the company’s history. Mercedes-Benz passenger vehicles and SUVs fueled the company’s performance, with the C-Class leading the way with a 56.4 percent increase in sales. The E-Class followed with sales of 4,097, and the M-Class rounded out the Top 3 with sales of 4,002, up 61.1 percent.

Nissan/Infiniti: Nissan North America Inc. reported January sales of 79,313 units, an increase of 10.4 percent vs. last year. Nissan Division sales rose 12.5 percent for the month to 72,517 units, with Versa sales setting a new record with 9,418 deliveries (up 8.5 percent). Sales of Infiniti vehicles decreased 8.2 percent from the prior year to 6,796 units, while sales of the Infiniti QX totaled 1,020, an increase of 30.4 percent vs. last year.

Toyota: Toyota Motor Sales reported monthly sales results of 124,540 units, an increase of 7.5 percent over the year ago month on a daily selling rate (DSR) and unadjusted raw volume basis. Driven by an increase in sales of 2012 Camry and Camry hybrid, Toyota Division posted January sales of 112,266 units, an increase of 9 percent compared to the same period last year. The Lexus Division reported sales of 12,274 units, down 4.6 percent from last January.

Volkswagen: Volkswagen of America Inc. posted 27,209 units sold in January, a 47.9 percent increase compared to the year-ago period. Passat sales totaled 6,318 units, while Jetta sales totaled 9,564 units. Sales of the 2012 Beetle totaled 1,401, while Touareg sales increased 68 percent. Tiguan sales increased 50 percent. The TDI models experienced a 30.2 percent increase vs. 2011.

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U.S. Economic Growth Will Continue to Lag, Says TD Economics


CHERRY HILL — A new report released by TD Economics indicated that the U.S. economy will continue to grow, but the affiliate of TD Bank says the economy may not be able to sustain additional shocks to the system.

According to the report, temporary shocks to the economy, such as rising gas prices, supply shock from Japan and inclement weather, have dissipated, but the impact on consumer confidence is likely to stifle economic growth over the next several quarters, reported F&I and Showroom magazine.

“Financial markets suffered a crisis of confidence this summer, the fallout from which will impact the economic recovery,” said Craig Alexander, TD chief economist and author of the report. “A more robust pace of economic growth will require tackling the legacy issues of the financial crisis still burdening the recovery.”

The report comes about two weeks after TD Bank reported that its indirect lending segment increased $2.7 billion during the second quarter, a 25 percent jump company officials partially attributed to the acquisition of Chrysler Financial. The company also reported that revenue for the quarter increased by $192 million, primarily due to a greater number of calendar days in the current quarter, volume growth and stronger insurance revenue. Additionally, business loans and acceptances volume increased $4.1 billion, or 13 percent.

TD Economics also reported that lower levels of consumer confidence coupled with political events in the United States and Europe over the summer has created a more difficult forecasting environment. Business and household confidence are experiencing pressure from a number of areas, including the downbeat mortgage market, ongoing risk aversion and balance sheet repair among financial institutions and households.

The reported noted, however, that current economic challenges doesn’t mean the U.S. economy will fall into another recession, as the credit environment is showing signs of improvement, particularly for commercial and industrial loans. Additionally, the economy is benefiting from a rebound in exports and auto production.

Still, none of these positive signs are taking hold in large proportions and, as a result, real GDP growth is likely to move at a pace of just 1.6 percent in 2011 and improve slightly to 1.7 percent in 2012 and to 2.6 percent in 2013, according to the report. The dysfunctional housing market and long-term unemployment are two key issues that are an impediment to a speedier recovery.

“As long as these structural issues persist, it will be difficult for the economy to deliver a stronger recovery,” Alexander said.

Mortgage lending plays a central role in generating credit within the financial system and has failed to show improvement, the report noted. About seven out of 10 households own residential real estate and mortgage debt accounts for three-fourths of all household liabilities. As home prices have fallen 30 percent from their peak, depleted equity has eroded wealth and limited access to credit.

“As a result, consumer spending and credit growth are likely to remain constrained until home prices stabilize,” Alexander said. “Unfortunately, this won’t occur until progress is made in drawing down the huge stock of foreclosed properties gumming up the market.”

TD Economics estimates that at the current clearing rate of around 1.5 million distressed sales per year, it would take four to five years to clear the inventory overhang.

Labor market issues also are hindering a speedier recovery, with the swelling ranks of long-term unemployed being a key factor differentiating this recovery from past ones. Before the downturn, the average duration of unemployment never exceeded 20 weeks but has since been recorded at 40 weeks as recently as July.

“Skills atrophy over time, and a person who has gone without work for over a year will face more difficulty finding employment in their area of expertise,” Alexander said. “Getting chronically unemployed workers working again will require more aggressive action than in previous economic cycles.”

If President Obama’s $447 billion plan is put in place, TD Economics predicts that it would boost the economic growth forecast by around 0.8 percentage points in 2012 and add around 800,000 jobs to U.S. payrolls. The lift to economic jobs and employment growth would be temporary though, as the expiration of the new fiscal stimulus would act as a greater drag on economic growth beyond 2013.

“While the American Jobs Act would help shore up job growth, it is unlikely to be a game-changer,” Alexander said. “Currently, we haven’t included these estimates into our forecast, as we wait for clarity on the degree to which policies will be enacted.”

The bottom line is that U.S. recovery will proceed, but it is unrealistic to expect a decent pick-up in momentum in the face of unresolved structural challenges, according to the report.

“The forecasting environment is riddled with uncertainties related to political unknowns, both domestically and internationally,” Alexander said. “TD Economics forecasts another two years of modest growth corresponding with an unemployment rate that is expected to hover around nine percent through 2012 and drop to 8.6 percent by 2013.”

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Chrysler’s CEO Could Get Stock Worth $2.9M


DETROIT – Chrysler CEO Sergio Marchionne will get stock valued at almost $2.9 million if the company repays the money it still owes the U.S. government, according to disclosure forms the company filed on Friday.

Marchionne, who also is CEO if Italy’s Fiat SpA, will get 361,446 shares for his service as a director on the Chrysler Group LLC board, reported Msnbc.com.

He’ll get the shares after Chrysler repays to the government, or on June 10, 2012, whichever is later, according to the filing with the U.S. Securities and Exchange Commission. As of Dec. 31, the shares were valued by the company at $7.95 each.

Chrysler nearly ran out of cash and needed a $12.5 billion U.S. government bailout to make it through a 2009 filing for bankruptcy protection. The company still owes the government $5.8 billion.

Chrysler’s eight other directors, including Chairman Robert Kidder, will get the same number of shares as Marchionne, in three annual increments that started in June of 2010 and run through June of 2012.

The value of the shares is likely to be much higher than $7.95 each when the company sells stock to the public, perhaps as early as the fourth quarter of this year. The filing said Chrysler has 1 million shares outstanding, so at $7.95, the company’s total market value would be only $7.95 million. By comparison, General Motors Co. shares closed Friday at $33.25, giving the company a market value of $49.88 billion.

Chrysler said it started filing financial disclosure forms with U.S. regulators as part of a 2009 agreement when the company emerged from bankruptcy protection.

Friday’s filing comes ahead of the planned stock sale, although Chrysler said in a statement that it was not related to an IPO.

The form filed Friday registers Chrysler’s stock with the SEC. Of the company’s 1 million shares, the largest holder is a United Auto Workers health care trust for retirees at 63.5 percent. Italy’s Fiat SpA, which is managing Chrysler, owns 25 percent, while the U.S. government holds 9.2 percent and the Canadian government owns 2.3 percent.

Chrysler said it now will file reports with the SEC on its business and financial conditions “disclosing material events as they emerge.”

Chrysler nearly ran out of cash and had to be rescued from liquidation with bailouts from the U.S. and Canadian governments. The governments got their stakes in the company in exchange for part of the money they provided.

In the 2009 bankruptcy, Chrysler pared its debt and labor costs so it can make money at a relatively low sales level. But the company has yet to post a net profit since emerging from bankruptcy protection, although it cut its losses last year to $652 million and promised to make $200 million to $500 million in 2011. The company lost about $8 billion in 2009.

Chrysler could repay its government loans by the end of March. Marchionne has said he hopes to refinance them with private lenders to get a lower interest rate. Chrysler now pays 11 to 12 percent interest on the $5.8 billion owed to the U.S. and $1.3 billion owed to Canada. The U.S. government originally provided $12.5 billion in bailout financing, while Canada provided $2.4 billion.

Marchionne, 58, gets no pay for his work at Chrysler CEO, which often includes long days and travel between Italy and the United States.

Friday’s filing also details Chrysler’s business plans, most of which have been disclosed previously by the company.

It said the company remains vulnerable to rising gasoline prices because its vehicle lineup is still weighted toward larger vehicles. Chrysler introduced 16 new or revamped models last year but still has few fuel-efficient models.

The company also disclosed that it spent $1.5 billion on research and development last year, compared with about $1.1 billion in 2009 and $1.525 billion in 2008.

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Chrysler Badly Needs Cheap Loans GM Spurns


GM withdrew its application for $14 billion in low-interest loans from the U.S. government on Thursday, saying it had enough cash to fund vehicle development as fuel economy standards tighten over the next five years, Reuters reported.

But Chrysler, which reports fourth quarter earnings on January 31, has made it clear the same Department of Energy loans GM has spurned are crucial to its turnaround.

In 2009, both GM and Chrysler applied for loans through a Energy Department program designed to spur the development of more fuel efficient cars.

Chrysler’s $3 billion loan application is still pending, denying the automaker a chance to refinance its pricey bailout loans before an expected initial public offering this year.

“It just underlines the special challenges for Chrysler,” Sean McAlinden, chief economist for the Center for Automotive Research, said of GM’s decision to withdraw its application.

“They’ve got another really tough year and they need the money.”

Adding to Chrysler’s challenges is the fact the federal loan approval process appears to have bogged down over collateral that could be pledged by Chrysler.

Chief Executive Sergio Marchionne, who expected the money by the end of 2010, said last week he still expected Chrysler would receive the loans.

“Am I concerned with the fact that this thing is taking longer than I thought? The answer is absolutely yes,” Marchionne told reporters.

He added that a “tripartite” discussion between Treasury, the Department of Energy and Chrysler would be needed to sort out the issue.

‘BEHIND THE EIGHT BALL’

At the height of the financial crisis, U.S. government officials hotly debated whether Chrysler was worth saving. The company ultimately filed for bankruptcy and is now managed by Italy’s Fiat SpA (FIA.MI).

Chrysler’s latest vehicles, such as its 2011 Jeep Grand Cherokee, have been well received, but its 2010 lineup ranks last in terms of fuel economy among major automakers, according to the Environmental Protection Agency.

“They’re way behind the eight ball and technology keeps changing,” said Patrick O’Keefe, a financial transactions consultant in the auto industry with O’Keefe and Associates. “It’s hard to play catch up.”

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A Resurgent Chrysler Says It Is Here to Stay


DETROIT — A year ago, Chrysler didn’t have a single new vehicle to display at its hometown auto show, and rival executives were taking bets on how long the smallest and most troubled of Detroit’s three automakers would last.

Now it is looking like the obituaries were premature. After stabilizing sales in the United States last year, Chrysler is in the midst of a product blitz that company executives and industry analysts say should help it pay off its government loans and re-emerge as a public company this year, reported The New York Times.

Chrysler’s chief executive, Sergio Marchionne, said Monday that the company was gaining traction with new products after subsisting on older models in the aftermath of its government-financed bankruptcy in 2009.

“I haven’t gotten any questions yet today like, ‘Will you be here next year?’ ” Mr. Marchionne said on the opening day of media previews at the North American International Auto Show here. “There were some severe doubts that we could execute what we promised.”

It has been a difficult road back so far for the company, which has lagged General Motorsand Ford in its comeback. But the addition of several new and revamped models helped increase Chrysler’s sales in the United States by 16 percent in 2010, and now the company appears to be positioned to gain market share for the first time in several years.

Chrysler still trails G.M. and Ford, both of which are expected to report substantial profits for 2010 later this month. But it has gotten a big boost from the introduction of the redesigned version of its Jeep Grand Cherokee sport utility.

Industry analysts had been skeptical that the S.U.V. would do well in a market more and more dominated by lighter-weight crossover vehicles. Sales of the Grand Cherokee, however, increased 68 percent last year and helped the overall Jeep brand improve sales by 25 percent. On Monday, the company also unveiled a new version of its flagship sedan, the Chrysler 300. It is an unapologetically large car that Mr. Marchionne predicted would appeal to consumers not interested in downsizing.

With its big grille and spacious interior, the 300 stands out from the compact and hybrid cars that most automakers are highlighting in Detroit. At a base price around $30,000 and with fuel economy estimated at 27 miles per gallon on the highway, the car is a critical building block in restoring Chrysler’s reputation.

“I think this company is slowly proving it can come back,” said David Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich. “They have been helped quite a bit by relatively stable fuel prices.”

Most of Chrysler’s new vehicles have been produced in collaboration with its Italian partner, Fiat. The Obama administration gave Fiat a 20 percent stake in Chrysler in exchange for providing new technology to the company, and set benchmarks for it to increase its ownership position.

On Monday, Fiat increased its stake to 25 percent because it had met the guideline of producing a new fuel-efficient engine in the United States. Fiat can raise its ownership to 35 percent by building a new small car in the United States and increasing its international sales.

Mr. Marchionne said Fiat might raise its stake as high as 51 percent once Chrysler repays the $7.1 billion in loans it still owes to the United States and Canadian governments.

He said Chrysler was planning to pay off the loans this year and then pursue an initial public stock offering to reduce the majority ownership position of the United Automobile Workers health care trust — currently 63 percent — and smaller stakes held by the American and Canadian governments.

“We are going to repay one hundred cents on every dollar of loans we received,” said Mr. Marchionne. He said it was unlikely that Chrysler would attempt a stock offering until its loans were repaid.

“I think it would be advantageous for us to repay it all before we do an I.P.O.,” he said.

Chrysler has yet to post a quarterly profit since emerging from bankruptcy, but Mr. Marchionne indicated that it was getting close. “We should see in the first or second quarter how far we’ve come,” he said.

Chrysler’s long-term outlook is heavily dependent on a series of smaller, fuel-efficient models it will get from Fiat, the first of which is the tiny Fiat 500 micro-car that is to arrive in this country later this year.

But in the interim, Chrysler is hewing to its previously successful formula of stylish, affordable cars and rugged sport utility vehicles — albeit with better mileage than previous products.

Mr. Marchionne said there was no question the company would meet the new federal fuel economy guidelines of 36 miles per gallon, which go into effect in 2016.

But he said that most of Chrysler’s fuel-economy improvements would come from improving its internal combustion engines rather than introducing a large number of electric or hybrid vehicles.

“The downsizing of our engines is continuing,” he said.

Still, Chrysler is the most vulnerable of the Detroit auto companies to a rise in fuel prices. About 80 percent of its sales in the United States are light trucks rather than cars, and that won’t change until the Fiat-based models go on sale. But even its competitors are impressed by the early stages of its turnaround.

“You have to give them credit for the product freshening they’ve done this year,” said James Farley, Ford’s head of global sales and marketing. “You have to respect that they are executing their plan.”

The arrival of the new Chrysler 300 is a big turning point for the company. The statuesque sedan is the linchpin of the brand’s promise of “affordable luxury” and aggressive styling. Mr. Marchionne said the car’s size and fuel economy would not deter consumers looking for stylish alternatives to an S.U.V. or crossover vehicle.

“You want a full-size car, this is the best fuel economy you can get,” he said. “If you want 37 miles per gallon, go get a Fiat 500.”

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Fiat Raises Chrysler Stake, Readies for IPO


DETROIT – Fiat lifted its stake in Chrysler to 25 percent today as CEO Sergio Marchionne prepares for an upcoming round of meetings with bankers to refinance Chrysler’s debt and to ready an initial public offering of shares.

Fiat said in a statement that it had raised its ownership in Chrysler to 25 percent from 20 percent at no financial cost under the terms of a deal that had been negotiated with the U.S. Treasury as part of Chrysler’s bailout, reported Automotive News.

The announcement, which came as Chrysler showed off new and revamped vehicles at the Detroit auto show, increases the likelihood that Fiat will own a majority of Chrysler by the end of the year.

Marchionne said he and other Chrysler executives would begin more intensive meetings with Wall Street bankers in the current quarter to prepare for an IPO expected by the end of the year.

Refinancing a priority

The immediate priority will be to develop a plan to refinance Chrysler’s bailout debt to the U.S. Treasury, Marchionne said.

“We have spent some time with the financial institutions the last two or three months and we are going to get into a much deeper discussion in the first quarter of 2011 as to how to get that done,” Marchionne told Reuters Insider.

“I am expecting that by the second quarter of this year we will have a plan that we can announce,” he said, speaking on the sidelines of the Detroit auto show.

Marchionne said it was possible that a Chrysler IPO could come before the fourth quarter, but that would depend in part on the strength of the stock market. “I think we need to do some more work before we open our trap,” he said.

Marchionne said he hoped that Fiat’s progress in restructuring Chrysler since it took control of the automaker in 2009 would silence the skeptics and win over potential investors and creditors.

Chrysler used the Detroit auto show — the industry’s largest trade show — to showcase a redesigned and re-engineered version of its 300 sedan as well as a revamped mid-size sedan now known as the 200 and a refreshed version of its minivan.

“I think we’ve proved over the last 19 months what this group can do. A lot of people were incredibly skeptical about our ability to launch all of these products within a short period of time,” Marchionne said.

Winning approval

Fiat was given management control of Chrysler and an initial 20 percent stake with the opportunity to raise its holdings to 35 percent by meeting certain performance targets set by the Obama administration.

By winning approval to build a Fiat-designed, fuel-efficient engine at a Chrysler plant in Dundee, Mich., the Italian automaker was cleared to raise its stake in Chrysler to 25 percent.

If Fiat helps Chrysler increase sales outside North America and builds a vehicle in the United States that achieves 40 miles-per-gallon in fuel efficiency, the Italian automaker can raise its stake in Chrysler to 35 percent.

Fiat recently spun off its truck and tractor division now known as Fiat Industrial. That spin-off was seen as clearing the way for the creation of a bigger trans-Atlantic auto group led by Marchionne.

Chrysler executives said they hope the second-generation 300, which had been developed in part before the automaker’s bankruptcy, would win back luxury consumers who would not have considered its vehicles in recent years.

The first-generation 300 was a smash debut for Chrysler five years ago but the automaker was criticized for not investing enough in refinements to keep it competitive with newer full-size sedans from rivals like the Taurus from Ford Motor Co.

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