Daimler Blames Chrysler For Losses, Expects Prolonged Downturn
August 20th, 2009 | by admin |
Matthew C. Keegan asked:
Daimler AG, the big German automaker who produces Mercedes, Maybach and Smart cars, announced a big fourth quarter loss of $1.95 billion, placing much of those losses on the back of Chrysler LLC, a company the automaker still holds a stake in. Daimler said that they would have realized a gain for the quarter, but its 19.9% investment in Chrysler LLC wiped that gain out.
But declining sales for Mercedes has hurt the German company too, as Mercedes US sales slipped by 11.2% in 2008. In January, the decline deepened with Mercedes sales plunging 42.9%. Daimler ended its fourth quarter on December 31st, so January sales have no bearing on the latest profit numbers.
Seeing that the trend is downward, Daimler has announced that they expect losses to increase for 2009. As a result, the automaker is cutting production and trimming administration costs. In addition, Daimler says that there will be more sharing between various products.
Daimler has expressed interest in selling its remaining share in Chrysler LLC, but not movement is pending on that effort. Daimler is keeping its eye on a potential Fiat-Chrysler hook up which would make it easier to sell its share in the troubled US automaker. Last summer, Daimler wrote down its value in Chrysler to zero, but that move hasn\’t absolved the company of its share in Chrysler\’s profits or losses.
A small, but bright light for Daimler has been its Smart car unit, which was rolled out to the US market in January 2008. Since then, the company has sold more than 26,000 units of the low cost car, which has helped to stem US losses across all three brands to just 1.5% in 2008. However, the profit lines on the diminutive Smart are much lower than the typical Mercedes, demonstrating that Daimler needs to see a rebound with its higher cost cars if it hopes to turn a profit.
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Daimler AG, the big German automaker who produces Mercedes, Maybach and Smart cars, announced a big fourth quarter loss of $1.95 billion, placing much of those losses on the back of Chrysler LLC, a company the automaker still holds a stake in. Daimler said that they would have realized a gain for the quarter, but its 19.9% investment in Chrysler LLC wiped that gain out.
But declining sales for Mercedes has hurt the German company too, as Mercedes US sales slipped by 11.2% in 2008. In January, the decline deepened with Mercedes sales plunging 42.9%. Daimler ended its fourth quarter on December 31st, so January sales have no bearing on the latest profit numbers.
Seeing that the trend is downward, Daimler has announced that they expect losses to increase for 2009. As a result, the automaker is cutting production and trimming administration costs. In addition, Daimler says that there will be more sharing between various products.
Daimler has expressed interest in selling its remaining share in Chrysler LLC, but not movement is pending on that effort. Daimler is keeping its eye on a potential Fiat-Chrysler hook up which would make it easier to sell its share in the troubled US automaker. Last summer, Daimler wrote down its value in Chrysler to zero, but that move hasn\’t absolved the company of its share in Chrysler\’s profits or losses.
A small, but bright light for Daimler has been its Smart car unit, which was rolled out to the US market in January 2008. Since then, the company has sold more than 26,000 units of the low cost car, which has helped to stem US losses across all three brands to just 1.5% in 2008. However, the profit lines on the diminutive Smart are much lower than the typical Mercedes, demonstrating that Daimler needs to see a rebound with its higher cost cars if it hopes to turn a profit.
Drink Vending Machines
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