Chrysler Earnings Weaker as Company Rolls Out New Models

The company said that shipments fell 6%, from 607,000 a year ago to 574,000 and that worldwide sales rose to 563,000 vehicles, up 8% compared with 523,000 vehicles sold in the first quarter of 2012. In the fourth quarter of 2012 the company sold 533,000 vehicles.

Chrysler attributed the lower shipments to the end of production for the Jeep Liberty model and the launch of the company’s new 2014 model year Grand Cherokee during the current quarter. Continued economic weakness in Europe and import restrictions in Latin America also contributed to the decline.

The company reaffirmed its earlier guidance for the full fiscal year. Chrysler expects to ship 2.6 to 2.7 million vehicles worldwide, and full-year revenues are forecast at $72 billion to $75 billion and net income is expected to total $2.2 billion.

Chrysler’s performance is critical to Fiat. In 2012, the Italian company posted net revenues of about $110 billion. Of that total Chrysler provided almost 60%, $65.8 billion.

The story is likely to be more of the same in 2013. Without North American Chrysler sales, Fiat would be struggling much harder to overcome the sales decline in Europe. Every major European automaker now faces profit challenges, and mass-market makers like Fiat are particularly vulnerable because mass-market cars do not sell well internationally.

While it may seem odd, Chrysler is Fiat’s answer to Volkswagen’s Audi brand, BMW and Mercedes, and North America is Fiat’s China. Chrysler needs to perform in order for Fiat to thrive.