Chrysler Canada continued its hot streak to start 2013, ending the first month of the year at No. 1 – 16,928 units sold for a 2.7 per cent year-over-year increase, notes DesRosiers Automotive Consultants. How long can Chrysler’s hot streak last? Perhaps not much longer.
First, the facts. Chrysler ended 2012 as the No. 2 retailer in Canada, with sales up 5.5 per cent (242,224). DesRosiers says Chrysler’s sales in January 2012 “foretold an excellent full-year sales performance at Chrysler, with the Detroit-based automaker finishing ahead of GM at year-end,” says the consulting firm in a note to clients.
But maintaining this torrid growth will be a challenge for Chrysler, even though the company just reported operating profits were up 47 per cent (to $2.9-billion U.S.) for all of the 2012 fiscal. Net profit hit $1.7-billion (U.S.) on revenue that was up 20 per cent to $65.8-billion (U.S.).
The good news for Chrysler, notes just-auto.com, is that while the company had a good 2012, profits might have been higher if the company’s sales were less dependent on less profitable cars. Compounding the profit problem were higher research and development costs and soaring advertising expenses.
“While we are pleased to have achieved strong financial results in 2012, the enterprise we are crafting is not complete,” chairman and CEO Sergio Marchionne said in a statement with the financial results.
Indeed. As The Wall Street Journal reports, in discussing the company’s results, Marchionne, the 60-year-old, Italian-born Canadian suggested that Chrysler’s “road gets a lot bumpier from here,” adding that the “trouble comes in part from delays in the release of new Chrysler, Dodge and Jeep models, even as rivals crank up new-car debuts.”
In a briefing at the end of January, Marchionne said the Chrysler Group has dropped plans to pack five more small nameplates into its Chrysler-Dodge-Jeep-Ram showrooms, though as Automotive News reports, Fiat is getting more nameplates and Alfa Romeo is on the way to North American showrooms, too.
Chrysler’s challenges in large part stem from problems in Europe for Chrysler’s parent, Fiat. Europe, of course, is an economic basket case and Fiat’s Italian home market is a disaster, like much of Western Europe. Chrysler’s plan to have Fiat assemble two small Chryslers in Europe this year has been cancelled in a revised five-year product plan, and as the industry publication notes, the company has dropped another Chrysler vehicle that was to be built by Fiat last year.
So the Dodge and Chrysler brand lineups will not change much this year, notes The Wall Street Journal. In a conference call with analysts and journalists, Marchionne pointed to updates to the Jeep Grand Cherokee. They are an example of the “staggering” development costs Chrysler continues to face as rebuilds its lineup in the wake of the 2009 bankruptcy in the U.S.
The Chrysler Group had planned to offer as many as eight new or redesigned vehicles this year, including at least one new mid-size car this year, a subcompact and two small Jeeps, notes The Wall Street Journal. Some of those launches are being pushed back to 2015 or even 2016.
Meanwhile, Marchionne has acknowledged that the Dodge Dart compact has not been as successful as had been hoped when the car was launched last year. Some have complained about the lack of engine power, others have said it was a mistake to launch the Dart with manual transmissions, notes the U.S. business journal, which also pointed out that Marchionne said the Dart may have been launched with too many variations and upscale features.
“We’re working on this now, and we’ll see the benefit once the 2014 model year is launched,” he told the Journal, adding transmission and engine updates are coming, though these sorts of product investments place large demands on the company’s limited resources.
The Dart was in Chrysler Canada showrooms for less than half of 2012, with sales coming in at 3,460. December 2012 was a strong month for Dart (849 sold), but January Dart sales slumped to 447. If overall Dart sales in 2013 meet the December 2012 average, then Chrysler Canada can expect to sell 10,000 or more through the end of December 2013. That’s good, but a blip compared to the 64,962 Civics Honda sold in 2012. More worrisome, if January is a harbinger of things to come, Dart sales in 2013 might total about 5,000 – a paltry number, to say the least.
So one thing I learned from the January sales numbers is that while Chrysler continues to chug along nicely, the year ahead is going to get challenging, month-by-month. Here are four other things I learned from the January results, with five more coming tomorrow in a second post:
2. We might be in for a record year for new vehicle sales in Canada. DesRosiers points out that the SAAR (seasonally adjusted annual rate) for January was 1.7 million – a solid increase over the 1.675 million new vehicles sold in Canada for all of 2012.
3. Chrysler may have led the industry in total sales, but as DesRosiers points out, “Ford was actually the big winner in January with sales up 8.1 per cent and a 17.0 per cent share of the market” to 16,193. For the record, General Motors’ sales were up 6.2 per cent last month, that in a market that was down 2.2 per cent overall.
4. Nissan Canada remains a mystery. Despite the arrival last year of three all-new core models (Sentra compact, Altima mid-size and the Pathfinder SUV), sales overall were down 13.6 per cent in January. Nissan officials say they expect increases in the year ahead, given the strength overall of the new products, and the attractive pricing. Pathfinder sales were up 35.7 per cent in January, while Sentra sales increased 7.5 per cent. Sales at Nissan’s Infiniti luxury unit were up 42.7 per cent.
5. Toyota Canada stumbled in January, too. Sales were down 11.5 per cent. The company says it ran short of outgoing RAV4 compact utilities, in anticipation of the launch of an all-new 2013 RAV4. If the new RAV does as well as the new Toyota Avalon near-luxury sedan (sales up 169.2 per cent), then Toyota can expect a strong 2013 as the new RAV rolls out this spring.