Higher incentives and a monthlong strike sliced Chrysler Corp. profits in the second quarter, down more than 50 percent to $483 million.
'Aside from the strike, we had a pretty good second quarter,' said CFO Gary Valade.
General Motors and Ford Motor Co. report quarterly earnings on Wednesday, July 16. Ford is expected to report higher profits; GM's story should be similar to Chrysler's.
Like Chrysler, incentives will drain GM's profit. Labor unrest will be a big factor. GM warned investors on June 30 that strikes cost it 96,000 units of production in the second quarter and an estimated $490 million of net income.
Chrysler said a 29-day strike at an engine plant in Detroit, which eventually shut down seven assembly plants, cut vehicle shipments by about 89,000 units, and cut net income by $438 million for the quarter.
The UAW hit both companies where it hurts: in light trucks.
'The strike took out a lot of high-margin production,' Valade said. He said the chances of recovering all those units is 'virtually zero,' but Chrysler could make up as many as 25,000 units by year end.
Analysts expect GM's per-share profits to fall about 20 percent for the quarter, not counting certain one-time events, Boston-based research firm First Call said. Its net income was about $1.9 billion in the year-ago quarter.
Unlike GM and Chrysler, Ford is expected to report that its earnings topped the year-ago quarter, even though Ford probably has the highest incentives of the Big 3.
Analysts expect Ford's per-share net income to rise by about one-third, First Call said, again excluding certain one-time events. Ford posted $1.9 billion of net income in the year-ago quarter.
Valade said Chrysler spent an average of $980 per unit on incentives in the second quarter.
Since late last year, Ford no longer reports per-unit incentives. Rather, Ford reports marketing costs as a percent of revenues.