02 February 2010

Chrysler Still Not In The Game

January car sale numbers are out. They are measured against economically dismal January 2009. Still, gains for Ford and GM are a nice change from the usual drone of bad news.

Ford U.S. January sales rise 25% to 116,534 units . . .

GM January U.S. sales rise 14% to 146,825 units . . .

Chrysler U.S. Jan. sales fall 8.1% to 57,143 units . . .

Toyota Jan. U.S. sales down 15.8% to 98,796 units

More here

The hit from Toyota was expected. It is experiencing a massive recall due to a product defect in many of its models and stopped selling cars for part of the month. Time will tell if the decline is a bump in the road for Toyota or will lead to a long term decline in market share.

Ford's sales growth is strong, especially since the "cash for clunkers" program is over, and comes not long after its announcement that it made a profit in 2009, including the last three of the four quarters of 2009.

GM hasn't seen its sales rise for a long time and so its January sales improvement may indicate that the worst is over for the company.

Chrysler, however, despite being the smallest and least complicated of the companies (having shed its extraneous divisions and operations), and hence seemingly most capable of swiftly changing its course, still isn't righting itself. The decline relative to the other big American automakers is also odd given that Chrysler, unlike Ford and GM, has a foreign partner in Fiat to help it, and unlike Ford, it has shed the burdens of legacy liabilities shed in bankruptcy. It has falling sales along with Toyota, despite the fact that it lacks a good excuse for the slump. What is Chrysler doing wrong? Will it survive at all?

Notably, the ownership structure of GM and Chrysler are quite similar, but the performance of the two companies is very different.

Recall that in 2009, Chrysler sales were down 36% for the year to sales in absolute numbers that were the lowest for it since 1962, and that its sales fell more than any other major automaker in the U.S. market.

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