Marchionne to talk to suppliers about their 'envious' margins

Chrysler's Q2 profits rise 22% to $619 million on Jeep, pickup gains

Marchionne to talk to suppliers about their 'envious' margins

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Chrysler Group reported net income of $619 million in the second quarter on record Jeep sales and strong pickup deliveries.

The second-quarter profit jumped 22 percent from the $507 million net income it posted during the same quarter of 2013, Chrysler said in a report today.

Second-quarter revenue grew 14 percent to $20.5 billion.

Chrysler gained 0.8 percentage points of U.S. market share over the last year to 12 percent on quarterly U.S. sales of 533,000 vehicles, according to the Automotive News Data Center. Worldwide vehicle sales totaled 723,000, up 12 percent from a year ago, Chrysler said.

Jeep led the way with a 43 percent surge in global sales to 269,000 units. Ram's global sales rose 15 percent to 145,000 vehicles. 

Chrysler said its total U.S. sales rose 15 percent during the second three months of 2014 in the United States, its principal market.

Globally, Chrysler said it delivered just over 727,000 vehicles in the quarter, including vehicles it makes for other automakers, such as parent company Fiat.

The company reported cash of $13.3 billion, up from the $11.9 billion a year ago. Chrysler said it had a gross industrial debt of $13 billion, up from the $12.5 billion it had at the same point in 2013.

Chrysler also confirmed its full-year outlook given previously that includes adjusted net income between $2.3 billion and $2.5 billion on net revenue of about $80 billion.

Margin gains

In comments to analysts during a conference call, CEO Sergio Marchionne said the company plans to take several steps in the second half of the year to improve margins -- including speaking with suppliers about what he called their “envious” margins.

“I am absolutely mesmerized by some of the double digit performances that I’ve seen coming out of the supplier base. Unfortunately, when I see this, my blood pressure goes up,” Marchionne said. “There’s not a single doubt that we will approach our supplier base in a constructive way to find a way that we can at least participate in their well-being.”

Marchionne said he remains “grossly dissatisfied” with Chrysler’s ongoing margin performance, and he and CFO Richard Palmer suggested that Chrysler planned to look at incentive spending, pricing and global distribution plans for hot-selling Jeep vehicles as sources for potential improvement.

“I don’t mind making products available [in other global markets] as long as we don’t sacrifice margin here,” in North America, Marchionne said “I think we need to be slightly greedier.”

Reuters contributed to this report.

You can reach Larry P. Vellequette at lvellequette@crain.com.


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