After being saved from bankruptcy in 2009 by Italian manufacturer Fiat, U.S. carmaker Chrysler is now financially supporting its majority shareholder, writes Wall Street Journal. “It is very unlikely that the European market will recover this year. European market is in the fifth consecutive year of decline, while in Italy we have declined to 70s levels,” said chief executive of both companies, Sergio Marchionne, adding that it is clear that the roles have changed and Chrysler is now the financial engine of the group.
Fiat, which has invested money and technology in Chrysler when the U.S. group was in bankruptcy, now needs higher sales and profit from Chrysler to offset its losses. And this situation could take some time because car sales in the U.S. are about to reach 14 million new vehicles this year, compared with 12.7 million new cars sold last year. Fiat has managed to record a profit of €103 million due to Chrysler performance in the second quarter in North America. Without the sales of the U.S. company, Fiat would have reported losses of €246 million due to the crisis in the automotive industry in Europe.
Revenue, excluding Chrysler results, declined by 7.5%, to 9.2 million. “I don’t have bad news about Chrysler,” Marchionne said. “We are moving strongly towards the second half of the year.” Chrysler reported a second quarter profit of $436 million (€354 million), compared with a loss of $370 million last year due to the fact that the group paid back the loan to the U.S. and Canada governments. In the first quarter, the U.S. group reported a profit of $473 million.
The first car produced together, the Dodge Dart 2013, is now in the U.S. showrooms and it is expected that the sales will critical to the financial results of the second half. The compact class car is built on Fiat platform and will get a highway rating of over 40 mpg.
Audi, part of Volkswagen Group, increased sales forecast for U.S. and downplayed concerns about price pressures in China. Profit increased by 16% to €25 billion. Japanese company Honda has reported a profit of $1.68 billion, four times higher than last year. Sales increased by 42% to 2,436 billion yen ($31.1 billion). The American tire manufacturer Goodyear doubled its profit in the second quarter to $92 million, while the record results in North America have offset weak sales in Europe.
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