Chrysler props up Fiat

Fiat has seen its second-quarter net income slashed 92 per cent as it battles a struggling European economy, despite its North American unit Chrysler posting a 23 per cent spike in net income during the same period.

The Italian industrial powerhouse, which owns Ferrari, Maserati, Alfa Romeo and Lancia, posted a €103 million ($A120.5m) profit for the second quarter of 2012, almost €1.2 billion ($A1.4b) less than it recorded in the same quarter last year.

In fact, Fiat admitted it would have lost €240 million ($A280m) without strong results from its US offshoots, Chrysler and Jeep. Fiat’s sales in the quarter were down 13 per cent, while its domestic Italian market was off 19 per cent, which looks set to return it to 1979 volumes.

In spite of the reduced earnings, Fiat and Chrysler CEO Sergio Marchionne insisted it had been a “Good quarter from Fiat on the back of some really strong results over at Chrysler”.

While that’s encouraging, the European car market is shrinking for the fifth consecutive year and Marchionne hinted that he may need to resort to further industrial moves to shield Fiat from long-term harm.

“All of these questions need to wait until we have a better read of the European market development and we have a better read of Europe as a whole,” he said.

Marchionne has already pushed back new-car launches and told plant workers at the Panda plant in Napoli to stretch their normal month-long August holiday to six weeks to counter flat demand for the small city car.

In an indication of Europe’s worsening economy, Ford posted a 57 per cent profit plunge in the second quarter – a third of which was attributable to slower sales in Europe.

At the same time, however, BMW posted record sales and profit figures during the same period.

Meantime, second-quarter net income and operating profits for Chrysler Group LLC indicate the Fiat-owned US giant is well down the recovery track following its Chapter 11 bankruptcy proceedings three years ago.

Chrysler’s second-quarter figures show a net income of $436 million ($414m), an $US806 million improvement from the $US370 million net loss in the same quarter last year, which had included a $US551 million charge related to repayment of government loans.

Excluding the charge, net income increased $US255 million, or 141 per cent, period over period

Net revenue has gone up by 23 per cent, from $US37 billion to $US16.8 billion, and modified operating profit, at $US755 million, is up 49 per cent over last year.

The group’s net industrial debt is down to US$432 million compared to US$2.1 billion a year ago.

“Together, we are always striving to achieve more, to learn from the past and build upon our successes,” said Mr Marchionne.

“Our results reflect a tireless pursuit by the people of Chrysler Group to deliver the very best quality and value across our brands.”

The company’s second quarter $US755 million operating profit represented 4.5 per cent of revenue, which was up 49 per cent from the $US507 million of last year.

All this is on the back of a 20 per cent rise in worldwide sales to 582,000 for the second quarter, and an increased second quarter share of the US market which, with a 32 per cent increase in retail sales, improved from 10.6 per cent a year ago to 11.2 per cent.

 In Canada, Chrysler scored a 14.5 per cent market share. Part of Chrysler’s push to shift up a gear is the introduction of its new, fuel-efficient Dodge Dart model that has just gone on sale in the US (pictured).