Chrysler 2013 Annual Report Download - page 36

35
Report on
Operations
Any independent financing services provider will face other demands on its capital, including the need or desire to satisfy funding requirements
for dealers or customers of the Group’s competitors as well as liquidity issues relating to other investments. Furthermore, they may also subject
to regulatory changes that may increase their costs, which may impair their ability to provide competitive financing products to Group dealers
and retail customers.
Additionally, if consumer interest rates increase substantially or if financing service providers tighten lending standards or restrict their lending
to certain classes of credit, consumers may not be able to obtain financing to purchase or lease the Group’s vehicles.
To the extent that a financing services provider is unable or unwilling to provide sufficient financing at competitive rates to the Group’s dealers
and consumers, such dealers and consumers may not have sufficient access to financing to purchase or lease Group’s vehicles. As a result,
the Group’s vehicle sales and market share may suffer, which would adversely affect the Group’s financial condition and results of operations.
12. Vehicle sales depend heavily on affordable interest rates for vehicle financing
In certain regions, financing for new vehicle sales has been available at relatively low interest rates for several years due to, among other things,
expansive government monetary policies. To the extent that interest rates rise generally, market rates for new vehicle financing are expected
to rise as well which may make the Group’s vehicles less affordable to consumers or steer consumers to less expensive vehicles, adversely
affecting the Group’s financial condition and results of operations. Furthermore, because Group’s customers may be relatively more sensitive
to changes in the availability and adequacy of financing and macroeconomic conditions, the Group’s vehicle sales may be disproportionately
affected by changes in financing conditions relative to the vehicle sales of Group’s competitors.
13. Limitations on the Group’s liquidity and access to funding may limit its ability to execute its business plan and improve its
business, financial condition and results of operations
The Group’s future performance will depend on, among other things, its ability to finance debt repayment obligations and planned investments
from operating cash flow, available liquidity, the renewal or refinancing of existing bank loans and/or facilities and possible recourse to capital
markets or other sources of financing. Although the Group has measures in place that are designed to ensure that adequate levels of working
capital and liquidity are maintained, declines in sales volumes could have a negative impact on the cash-generating capacity of its operating
activities. The Group could, therefore, find itself in the position of having to seek additional financing and/or having to refinance existing debt,
including in unfavorable market conditions, with limited availability of funding and a general increase in funding costs. Any limitations on
the Group’s liquidity, due to decreases in vehicle sales, the amount of or restrictions in the Group’s existing indebtedness, conditions in the
credit markets, general economic conditions or otherwise, may adversely impact the Group’s ability to execute its business plan and impair
its financial condition and results of operations. In addition, any actual or perceived limitations of the Group’s liquidity may limit the ability or
willingness of counterparties, including dealers, customers, suppliers and financial service providers, to do business with the Group, which may
adversely affect the Group’s financial condition and results of operations.
14. The Group’s ability to achieve cost reductions and to realize production efficiencies is critical to maintaining its
competitiveness and long-term profitability
The Group is continuing to implement a number of cost reduction and productivity improvement initiatives in automotive operations, for
example, by increasing the number of vehicles that are based on common platforms, reducing dependence on sales incentives offered to
dealers and consumers, leveraging purchasing capacity and volumes between Fiat and Chrysler and implementing World Class Manufacturing,
or WCM, principles. The Group’s future success depends upon its ability to implement these initiatives successfully throughout its operations.
In addition, while some of the productivity improvements are within its control, others depend on external factors, such as commodity prices,