Mercedes 2006 Annual Report Download - page 102

86
Chrysler Group
Difficult market and competitive situation in North America | Shipments and production
adjusted to reflect market situation | Ten new products launched in 2006 | Operating loss of €1.1 billion |
Recovery and Transformation Plan presented
Business development impacted bydifficult market and
competitive situation in the United States. The Chrysler
Group’s launch of 10 aspirational newvehicles during 2006 and
rapid expansion around the globe was overshadowed by weaker
consumer demand combined withintense competition and a shift
toward more fuel-efficient passenger cars and crossover vehicles
in North America. The shift, resulting from higher fuel prices and
increased interest rates, were a disadvantage to the Chrysler
Group’s product range. Accordingly, the Chrysler Group signifi-
cantly reduced production and shipments to dealers in order
to rebalance dealer vehicle inventories and create space for the
new products coming in the pipeline. As a result, year-end US
dealer inventories were adjusted and reduced to 539,100 units
(2005: 598,200 units), equivalent to 74 days’ supply (2005: 85
days’ supply). Reduced shipments, a shift in mix and negative net
pricing resulted in the Chrysler Group posting an operating loss
of €1.2 billion in the third quarter; the operating loss for full-year
2006 amounted to €1.1 billion (2005: €1.5 billion operating
profit) (see page 44).
Worldwide, the Chrysler Group shipped 2.7 million Chrysler,
Jeep®and Dodge branded passenger cars, sports tourers, minivans,
SUVs and light trucks to its dealerships in 2006 (2005: 2.8
million). The most important markets were the United States with
2.1 million vehicles (-9%), followed by Canada with 222,500
vehicles (+6%) and Mexico with 130,900 vehicles (+7%). Shipments
to markets outside the NAFTA region totaled 214,400 units,
an increase of 22% compared to the prior year.
Worldwide retail and fleet sales decreased by 5% in 2006 to
2.7 million units (2005: 2.8 million), with decreases in the NAFTA
region offsetting an increase in markets outside of NAFTA.
Fleet sales accounted for 30% of total sales in the United States
(2005: 26%).
As a result of lower volumes and a weaker US dollar on average
for the year, the Chrysler Group’s revenues for the year of
€47.1 billion were significantly lower than in 2005 (€50.1 billion).
Lower sales in the US market. US sales were most affected
by the changes in consumer demand during 2006. Chrysler Group
retail and fleet sales in the US decreased by 7% to 2.1 million
units, resulting in a reduced marketshareof 12.6% (2005: 13.2%).
Lower sales of larger-size carryover products, such as the
Dodge Ram pickup (-9%), Dodge Durango (-39%), Jeep®Grand
Cherokee (-35%) and Chrysler and Dodgeminivans (-9%) offset
the many positive sales results for the all-new vehicles launched
during the year, including the Dodge Caliber (92,200 units),
the Jeep®Compass (18,600 units), Jeep®Wrangler and Wrangler
Unlimited (19,400 units), Dodge Nitro (17,000 units), Chrysler
Aspen (7,700 units) and Chrysler Sebring sedan (21,500 units).
With the exception of the Dodge Caliber, all of these new
models were launched in the second half of the year.
Significantly higher sales in markets outside North America.
The Chrysler Group sells vehicles in more than 125 countries
around the world, with sales outside North America currently
accounting for approximately 8% of total global sales. In recent
years, the Chrysler Group has expanded its operations outside
North America, and it will continue to increase the number of
products offerings in these regions. In 2006, the Dodge brand,
led by the Dodge Caliber, was added to Chrysler Group’s existing
distribution, dealer and service networks outside North America.
More than 90% of the Chrysler Group’s Western European dealers
are adding the brand to their product offerings.
(1,118)
47,116
2,892
1,638
2,548,731
2,654,710
80,735
% change
.
-6
-6
-4
-8
-6
-3
06/05
1,534
50,118
3,083
1,710
2,760,467
2,812,993
83,130
Amounts in millions of €
2005
Operating profit (loss)
Revenues
Investments in property,
plant and equipment
Research and development
expenditure
Production
Unit sales
Employees (Dec. 31)
2006