Chrysler made a lower-than-expected profit of $166 million in the first quarter, a decline of 65 percent from last year. It was not just analysts whose expectations weren't met; the CEO of the company admitted disappointment.
Sergio Marchionne said he knew the company would be "limping" in the period, due to retooling of the Toledo plant and preparations to launch the new Cherokee, but "we just didn't know how much."
Marchionne says some of the problem was a failure to keep shipments of cars in line with actual retail sales. He told analysts that although sales in the first quarter were robust, that didn't translate into lots of money for the automaker.
Car companies get paid for their products when they're received by the dealership.
"I did not build enough to replenish what I sold," Marchionne said, "so I undershipped sales."
Marchionne says his company's performance was particularly upsetting, given Ford Motor Company's record quarterly profit in North America.
"I think they should be complimented for having executed flawlessly," he said, "And to be perfectly honest I'm envious. But envy won't get us very far, so I think we need to clean up our act and move it on from here."
Meanwhile, Chrysler's majority owner, Fiat, lost $310 million in the first quarter, as the European recession drags on. But that loss was actually lower than the same period a year ago.
And Fiat is sitting on a lot of cash and credit, for good reason. Fiat hopes to buy the 41.5 percent of Chrysler it doesn't already own. The stock is owned by a union trust set up to pay for retiree health care from the proceeds of Chrysler stock sales.
Fiat and the trust have been haggling over the price of some of the union's stock, which Fiat has the option to buy before it's offered to the public. That dispute has landed the two sides in court. The court's determination of the value of the stock could lead to a deal between the two sides for all of the remaining stock.
That would avert the need for an initial public offering, although Marchionne has suggested that after such a purchase, which could cost well in excess of $3 billion, he might put some of the combined Fiat-Chrysler stock on the New York Stock Exchange to rebalance the company's books.
