2 U.S. automakers report losses
Posted on Thursday, October 26, 2006
DETROIT — After months of restructurings, job cuts, management changes and other moves to lift their fortunes, domestic automakers still are posting losses as market share slips further toward their Asian rivals.
General Motors Corp. and DaimlerChrysler AG’s Chrysler Group reported third-quarter losses Wednesday, joining Ford Motor Co., which on Monday posted a $ 5. 8 billion loss. In contrast, Tokyo-based Honda Motor Co. reported a profit Wednesday, although less than the same period last year.
A $ 1. 5 billion quarterly loss at Chrysler prompted some industry analysts to question whether its parent company would put it up for sale.
But even with the red ink, analysts said massive restructuring plans under way at GM and Ford and potential cost cuts and new products at Chrysler are painful but necessary steps as consumers shift away from their truck and SUV-dominated lineups.
“Rapid weight loss is not appropriate. They need to be on a steady plan of controlling costs and bringing out new products,” said Rebecca Lindland, an auto analyst at Global Insight, an economic research and consulting company. “They’ve got longterm issues that aren’t going to be solved in the short term.”
Of the Big Three, Ford’s loss was the worst, although the company blamed much of it on restructuring costs.
Chrysler was bailed out because its parent company had earnings of $ 686 million — down from a profit of just more than $ 1 billion a year earlier — fueled mainly by the $ 1. 3 billion earned by the Mercedes Car Group. Overall sales fell 8 percent to $ 44. 6 billion, hurt by a 26 percent decline at Chrysler.
GM posted a $ 115 million loss for the third quarter Wednesday, saying its results reflected benefits of its turnaround plan. The loss amounted to 20 cents per share for the July-September period, much less than its loss of $ 1. 7 billion, or $ 2. 94 per share, a year earlier.
GM said that excluding special charges, it would have earned $ 529 million in the period. It said that excluding charges associated with the reorganization at Delphi Corp., its former parts division, and its lowered assessment of the value of its finance arm, it earned 93 cents per share in the latest quarter.
The company’s revenue rose nearly 4 percent to $ 48. 8 billion for the quarter, up from $ 47. 1 billion during the same period last year. It said losses in both its global and North American automotive operations shrank as its efforts to cut costs began to show results.
But GM continued to lose market share in the quarter. Globally, its share was 13. 9 percent, down from 14. 4 percent during the same period last year. It dropped nearly a full point in the U. S. from 26 percent last year to 25. 1 percent this year.
That beat Wall Street expectations. Analysts polled by Thomson Financial predicted the company to earn 49 cents per share excluding special charges.
In North America, GM lost $ 374 million, but that was an improvement of $ 1. 3 billion over last year.
Honda said Wednesday that second-quarter profit slipped 4. 3 percent, but sales were strong especially in North America and Asia, where demand for fuel-efficient Japanese cars has been growing.
Quarterly sales at Japan’s No. 3 automaker jumped 12. 5 percent to $ 21. 8 billion, helping make up for soaring raw material and research costs.
At Chrysler, CEO Tom LaSorda said the company was “in no way satisfied” with its thirdquarter results.
“We have taken dramatic steps to reduce production and shipments to address the inventory situation in the U. S. and we continue to work to find new ways to eliminate waste, lower our costs and improve quality,” he said in a statement.
Chief Financial Officer Bodo Uebber said seven teams are examining Chrysler Group’s business practices including its product strategy and costs. No timetable was released for a report.
Uebber could not provide any more information when asked if he could rule out a sale of Chrysler.
“Though a number of new models — the Wrangler, Compass, Aspen, Nitro — are scheduled for imminent launch, Chrysler faces an uphill turnaround task,” said Stephen B. Cheetham, a European auto analyst at Sanford C. Bernstein Ltd. in London.
DaimlerChrysler’s U. S. shares rose $ 2. 35, or 4. 5 percent, to close at $ 54. 68 on the New York Stock Exchange.
GM’s stock hit a 52-week high Tuesday after four straight days of gains before the earnings announcement. But Wednesday, the shares dropped $ 1. 48, or 4. 1 percent, to close at $ 34. 71 on the New York Stock Exchange. Information for this article was provided by Matt Moore and Yuri Kageyama of The Associated Press.
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