Chrysler 2015 Annual Report Download - page 168

168 2015 | ANNUAL REPORT
Consolidated
Financial Statements
Notes to the Consolidated
Financial Statements
2. Cost of sales
Cost of sales during the years ended December 31, 2015, 2014 and 2013 amounted to €97,620 million, €81,592
million and €73,038 million, respectively, and included €115 million, €155 million and €173 million, respectively, of
interest and other financial expenses from financial services companies. Cost of sales also included €432 million, €160
million and €196 million related to the decrease in value for assets sold with buy-back commitments during the years
ended December 31, 2015, 2014 and 2013, respectively.
As part of the plan to improve margins in NAFTA, the Group will realign a portion of its manufacturing capacity in
the region to better meet market demand for Ram pickup trucks and Jeep vehicles within the Group’s existing
plant infrastructure. As a result, a total of €658 million, of which €422 million related to asset impairments and €236
million related to the payment of supplemental unemployment benefits due to extended downtime at certain plants
associated with the implementation of the new manufacturing plan, was recognized during the fourth quarter and was
recorded within Cost of sales for the year ended December 31, 2015.
Given recent increases in both the cost and frequency of recall campaigns and increased regulatory activity across the
industry in the U.S and Canada, an additional actuarial analysis, that gives greater weight to the more recent calendar
year trends in recall campaign experience, has been added to the adequacy assessment to estimatefuture recall
costs.This reassessment resulted in a change in estimate for estimated future recall campaign costs for the U.S. and
Canada of €761 million related to vehicles sold in periods prior to the third quarter that was recorded within Cost of
sales for the year ended December 31, 2015. In the second half of 2015, in connection with this reassessment, we
incurred additional warranty costs related to the increase in the accrual rate per vehicle.
Cost of sales for the year ended December 31, 2015 included total charges of €163 million, of which €80 million was
due to the adoption of the Venezuelan government’s Marginal Currency System (the “SIMADI” exchange rate) at June
30, 2015 (Note 30) and €83 million was due to the devaluation of the Argentinian Peso resulting from changes in
monetary policy.
Cost of sales for the years ended December 31, 2014 and 2013 included charges of €98 million and €43 million,
respectively, related to the devaluation of the Venezuelan Bolivar (“VEF”) exchange rate relative to the U.S.$ and the
remeasurement of our VEF denominated net monetary assets (Note 30).
Cost of sales for the year ended December 31, 2013 included charges of €115 million related to the voluntary safety
recall as well as customer satisfaction actions for certain Jeep vehicles and €57 million related to certain write-downs
within the cast-iron business of the Components segment (Teksid), which were partially offset by the €166 million
impact of a curtailment gain and plan amendments following FCA US’s amendment to its U.S. and Canadian salaried
defined benefit pension plans.
3. Selling, general and administrative costs
Selling costs for the years ended December 31, 2015, 2014 and 2013 amounted to €5,050 million, €4,499 million
and €4,213 million, respectively, and mainly consisted of marketing, advertising, and sales personnel costs. Marketing
and advertising expenses consisted of media campaigns as well as marketing support in the form of trade and auto
shows, events, and sponsorships.
General and administrative costs for the years ended December 31, 2015, 2014 and 2013 amounted to €2,678
million, €2,448 million and €2,402 million, respectively, and mainly consisted of administration expenses which were
not attributable to sales, manufacturing or research and development functions.