Buoyant US Auto Market Bolsters Sagging DaimlerChrysler

25 October 2002

Net income at German-American auto giant DaimlerChrysler fell globally by 22% during the third quarter of this year, although its US unit delivered a robust performance that shored-up the group’s operating profit.

Despite this – and a year-on-year doubling in Q3 operating profit to €1.7 billion ($1.66bn; £1.07bn) – the company remains guarded about its fourth quarter and the prospects for 2003, citing continued weakness in the global economy.

Nonetheless, the carmaker expects a profit at its US unit for the fourth quarter, boosting full-year results well beyond the breakeven target set by Chrysler president Dieter Zetsche earlier this year. The unit’s recovery under Zetsche’s leadership from substantial losses in 2000 and 2001 has accelerated throughout this year despite the challenging stateside trading climate.

Sales of the unit’s Dodge, Chrysler and Jeep models rose 11% during Q3, thanks to the zero-percent financing offers common to the big three US carmakers throughout this year. But Chrysler cfo Manfred Gentz was unenthused by the top trio’s discounting war.

US automakers, he said, must abandon these tactics or risk losing money. “I can’t really tell when this [move from discounting] will happen. But we can't continue in the long run with incentives,” says Gentz. “They are deteriorating the bottom line too much.”

Data sourced from: The Wall Street Journal Online; additional content by WARC staff