Chrysler cuts jobs as sales slow

Posted by admin on 25 October, 2008 under Business news | Be the First to Comment

Chrysler is to cut 1,825 jobs in the US, as demand for cars slows in tandem with economic growth.

A factory in Newark will now close at the end of this year, one year earlier than anticipated, and one shift at Toledo North Assembly Plant will go.

A senior official at Chrysler said that this was a “time of historic change in the auto industry”.

Carmakers such as Daimler, Hyundai and Fiat have forecast a tough year ahead, as consumers tighten their belts.

“The markets are facing unprecedented turmoil and we are in a time of historic change in the auto industry,” said Frank Ewasyshyn, Chrysler’s executive vice president of manufacturing.

The job cuts account for 6% of its American workforce.

The Toledo factory has been making the Dodge Nitro and Jeep Liberty, which have both been selling slowly. The Newark plant makes Dodge Durango and Chrysler Aspen sport utility vehicles.

Italian gloom

Earlier on Thursday, Italian carmaker Fiat had said that in a worst-case scenario its 2009 profits could fall by 65%, while global demand for its products could drop by 10-20%.

Fiat’s turnaround has been helped by the popularity of the 500 model

Even though Fiat made clear that its forecasts were a worst-case scenario, analysts took them as a profit warning.

The Italian company added that it believed the “erratic” conditions in financial markets were temporary and insisted they would not affect the “overall substance” of its turnaround target for 2010.

In recent years, Fiat has successfully turned around its business, helped by the revival of the cult Fiat 500 car.

Fiat’s third-quarter earnings were better than expected, with profit 8% higher at 802m euros (£632m), a performance it attributed to strong sales of farm machinery.

Korean realism

Hyundai Motor Company reported a 38% fall in third-quarter net profit, which was slightly better than expected.

Hyundai says demand in emerging markets is dropping

It expects to sell slightly fewer vehicles – 3.02 million versus an earlier forecast of 3.11 million – this year, but said it should meet other sales and operating targets, in part because of increased demand for more compact cars.

“Demand for smaller cars is rising, although global auto demand is shrinking,” said Park Dong-wook, a director at Hyundai’s treasury division.

“The market situation in emerging countries is much worse than expected,” he added.

Daimler

German carmaker Daimler reported a 213m-euro profit for the quarter, a dramatic turnaround from the 1.5bn-euro loss it saw in the same period a year ago.

Last year’s loss reflected “special effects from the Chrysler transaction”, the statement said, alluding to Daimler’s sale of 80% of Chrysler to Cerberus, a US private equity group, in May 2007.

But Daimler saw plenty of evidence of the impact of the banking crisis on consumer confidence, as sales fell.

Daimler sold 522,500 passenger cars and commercial vehicles in the third quarter, down 3% from the 537,000 sold in the same period last year. Its revenues were 23.8bn euros, down from 25.7bn euros.

“We recognise that the situation is very challenging indeed,” said Dieter Zetsche, chairman of Daimler’s board of management.

News reported by The BBC