Chrysler Profit Skids Due To Costly Product Launches | Edmunds.com
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Chrysler Profit Skids Due To Costly Product Launches


Just the Facts:
  • The costly product launches of the 2014 Jeep Grand Cherokee and 2013 Ram Heavy Duty pickup trucks are behind a drop in Chrysler Group's net income in the first quarter.
  • Chrysler Group said net income fell to $166 million in the first quarter of 2013, a 65 percent drop from the $473 million posted during the same period a year ago.
  • The disappointing results put extra pressure on the upcoming launch of the 2014 Jeep Cherokee, according to Michelle Krebs, Edmunds.com senior analyst.

AUBURN HILLS, Michigan — The costly product launches of the 2014 Jeep Grand Cherokee and 2013 Ram Heavy Duty pickup trucks are behind a drop in Chrysler Group's net income in the first quarter.

Chrysler Group said net income fell to $166 million in the first quarter of 2013, a 65 percent drop from the $473 million posted during the same period a year ago. Net revenue for the quarter was $15.4 billion, compared with $16.4 billion a year ago.

"As anticipated, the quarter was negatively affected by the reduced vehicle shipments that resulted from key product launches, namely the 2013 Ram Heavy Duty trucks and the 2014 Jeep Grand Cherokee, as well as preparation for the second-quarter production launch of the 2014 Jeep Cherokee," said Chrysler in a statement on Monday. "These actions are expected to position the company for a strong performance in the second half of 2013."

The disappointing results put extra pressure on the upcoming launch of the 2014 Jeep Cherokee, according to Michelle Krebs, Edmunds.com senior analyst.

"Chrysler needs the upcoming Jeep Cherokee, controversial in its styling, especially with Jeep purists, to be a hit as first-quarter financial results demonstrate," Krebs said. "Virtually all of the drop in vehicle sales, which led to lower revenue and lower profits, were due to the lack of an entry where the Jeep Liberty replacement will play."

Chrysler said worldwide vehicle shipments were 574,000 for the quarter, down from 607,000 a year ago, principally due to 31,000 fewer Jeep Liberty shipments as production ceased during 2012 in preparation for the production launch of the Cherokee in the second quarter.

"We remain on track to achieve our business targets, even as the first-quarter results were affected by an aggressive product launch schedule," said Chrysler CEO Sergio Marchionne in a statement.

Edmunds says: The successful launch of the 2014 Jeep Cherokee is crucial, given Chrysler's downbeat report today.

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