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Wednesday, 20 February, 2002, 12:35 GMT
Chrysler racks up hefty losses
PT Cruiser
Chrysler sales have fallen sharply
The US division of DaimlerChrysler, the fifth-largest car company in the world, posted huge losses in the past year.

Chrysler has been hit hard by the tougher market in the US, especially after the 11 September.

The unit posted an operating loss of 2.2bn euro (1.35bn; $1.93bn) in 2001 compared to a profit of 531m euro the previous year.

Chrysler's weak performance has caused the whole group to lower its profit targets for 2002.

Lowering targets

"Daimler Chrysler expects group operating profit for 2002 excluding one-time effects to exceed twice the 2001 level by a very significant amount," the company said in a statement.

That implies a target over 2.6bn euro but far below a 5.5bn-6.5bn target the company had set a year ago.

In 2002 we expect a significant decline in the market for passenger cars and light trucks in north America and a moderate weakening of demand in western Europe and Japan

DaimlerChrysler previously announced that it's full year operating profit for 2001 were flat at 1.3bn euro ($1.1bn, 0.8bn).

The firm said that Chrysler's restructuring plan will be intensified by the poor results in order to get sales back to the level of the previous year.

Chrysler now foresees US sales of 15 million vehicles in 2002 rather than a previously forecast 16 million.

Mercedes compensates

The US truck unit Freightliner, which only narrowly avoided slipping into the red after a slump in the sale of commercial vehicles, is also of particular concern to the group.

That unit is also in the middle of a restructuring, and chief financial officer Manfred Gentz admitted that the cost of this could be higher than anticipated.

But there was some cheer from the firm's luxury Mercedes Benz division and other parts of the company.

Mercedes posted profits of 3bn euros, up from 2.9bn the year before.

But Mercedes' sales were almost 20% down in the last three months of 2001, which can be attributed to declining sales of its E-class, which was phased out ahead of a new model that is currently being launched.

Bleak expectations

The group expects a 7% decline in sales to 142bn euro for 2001.

And the company said the anticipated decline "is mainly due to unfavourable market prospects, which will especially affect Chrysler and the utility vehicle division."

"In the year 2002 we now expect a significant decline in the market for passenger cars and light trucks in north America and a moderate weakening of demand in western Europe and Japan," the company said.

Sales are not expected to rise back above the level seen in 2000 until 2004.

After a sharp fall on Tuesday, shares in DaimlerChrysler were up 2.16% at 41.6 euros Wednesday morning.

Edward Lapham, Automotive News in Detroit
"The Chrysler group in American continues to lose market share."
The BBC's Duncan Bartlett
"Problems at Chrysler dragged DaimlerChrysler deep into the red."
See also:

06 Feb 02 | Business
DaimlerChrysler slides into loss
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16 Sep 01 | Business
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25 Apr 01 | Business
DaimlerChrysler falls into the red
26 Feb 01 | Business
DaimlerChrysler axes Mitsubishi jobs
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