Growing sales are the wrong kind for Chrysler
- Source: Shanghai Daily
- [08:35 August 09 2010]
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A year after getting billions of dollars in federal aid to stay in business, Chrysler now boasts each month about growing sales, insisting it is rolling down the road to recovery.
But beneath those figures are troubling signs for Chrysler and the company has a long way to go before it is truly healthy again.
Most of Chrysler's gains this year are said to have come from sales to rental car companies, governments and other businesses. Everyday drivers have shunned its dated lineup of cars and trucks.
A successful Chrysler is essential for the government because it is trying to get back the $15 billion in emergency loans it made to the company.
Chrysler lost $197 million in the first quarter, and it's expected to post a net loss when it releases second-quarter results Monday.
Overall, Chrysler's sales in the United States rose 12 percent from January to the end of June compared with 2009.
But sales to individuals, retail sales, tumbled 21 percent. These sales are important because they generate bigger profits than sales to rental companies and other bulk buyers, or fleet sales.
Chrysler CEO Sergio Marchionne said the company isn't overly reliant on fleet sales, but he knows that sales to individuals must rise.
He predicted they would rise as new models hit showrooms.
"The fleet side will become less and less relevant. But it's an important piece of the business," he told reporters.
Chrysler does not publicly break down sales for different groups of buyers. It says its retail sales are slowly growing.
Lack of enthusiasm for Chrysler cars and trucks is putting pressure on its dealers, who are trying to hold on while the auto maker overhauls its lineup. Its only new offering this year is a redesigned Jeep Grand Cherokee. Many dealers are happy with the Jeep, but say they need new products faster.
