Chrysler third quarter profit up 22 percent on truck demand

By Dee-ann Durbin

Associated Press

Published: Wednesday, Oct. 30 2013 9:31 a.m. MDT

Chrysler Group's net income rose 22 percent in the third quarter as strong sales of the Ram pickup and Jeep Grand Cherokee masked weaknesses elsewhere in its lineup.

Gene J. Puskar, Associated Press

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DETROIT — Chrysler Group's net income rose 22 percent in the third quarter as strong sales of the Ram pickup and Jeep Grand Cherokee masked weaknesses elsewhere in its lineup.

Chrysler said Wednesday that it earned $464 million in the July-September period. It was the Auburn Hills, Mich.-based company's ninth consecutive profitable quarter.

Worldwide vehicle sales for the third quarter were 603,000, up 8 percent from a year ago. The company's sales outside North America jumped 20 percent to 82,000, including 15,000 sales of Chrysler-made vehicles like the 200 convertible and 300 sedan, which are sold under the Lancia brand in Europe.

Chrysler reaffirmed its profit guidance, which it lowered in July. The company expects a full-year profit of between $1.7 billion and $2.2 billion on revenue of between $72 billion and $75 billion

Overall, it was a lackluster quarter in the U.S., where Chrysler does three-quarters of its business. Chrysler's sales rose 7.7 percent, lagging the total industry increase of 12 percent. The Chrysler, Dodge, Jeep and Ram brands saw sales increases, but Fiat's U.S. sales fell 7.5 percent. Chrysler didn't gain any U.S. market share during the quarter.

The company also delayed shipments of its new small SUV, the Cherokee, to fix issues with a new nine-speed transmission. Scheduled to go on sale in September, the Cherokee began arriving at dealers just last week.

But booming sales of the Ram and Jeep Grand Cherokee, both recently updated, helped boost Chrysler's results.

U.S. sales of the Ram rose 23 percent in the third quarter compared to last year. And buyers paid more — an average of $36,724 per truck, up 5.3 percent from the year-ago quarter, according to Kelley Blue Book estimates.

Jeep Grand Cherokee sales rose 30 percent, and buyers paid 9 percent more, or $40,175 per vehicle.

Karl Brauer, a senior analyst at Kelley Blue Book, said Chrysler's growth is hindered by aging vehicles like the Chrysler 200 and Dodge Avenger sedans. Chrysler's parent company, Italy's Fiat SpA, has been hurt by the recession in Europe, which is impacting the development of new products, Brauer said.

Fiat is scheduled to report its third-quarter earnings later Wednesday.

Fiat and Chrysler CEO Sergio Marchionne hopes to combine the two companies, but he first must convince the union-run trust that owns a 41.5-percent stake in Chrysler to sell its share to Fiat. The trust says that stake is worth $4.27 billion, while Fiat says it's worth $1.75 billion.

At the trust's request, Chrysler filed paperwork for a public offering of the trust's shares in September. Marchionne has made it clear that he prefers to settle the dispute without an IPO.

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