The Norman Transcript

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July 31, 2013

Chrysler’s 2Q net income up

DETROIT — Chrysler is having some growing pains.

The country’s third-largest automaker said Tuesday that its sales picked up in the second quarter thanks to strong U.S. demand for trucks and SUVs. But the company cut its target for full-year sales and profit, blaming persistent problems as it adds more shifts and ramps up production of vehicles like the Ram pickup and the Jeep Cherokee small SUV.

“You need to remember that in 2010 we produced 1 million cars. We’re now at two-and-a-half times that level,” Chrysler CEO Sergio Marchionne said in a conference call with analysts and media.

Marchionne said making sure Chrysler has enough parts from suppliers has been a problem. It’s also working out the bugs in new components. Engineers are still making adjustments to the Cherokee’s new nine-speed transmission, for example, even though the first Cherokees began rolling off the line in June.

Chrysler is also adding more workers, like the second shift of 1,100 people who will start making Cherokees next month and the 1,250 people who will start making transmissions in Kokomo, Ind., early next year.

Chrysler isn’t the only automaker who has had problems ramping up production. Ford Motor Co. delayed the launch of the new Lincoln MKZ sedan this spring because of production and quality issues.

But Marchionne said Chrysler is unusual because it’s updating so many products and parts at once. He also says Chrysler had a lot of catching up to do when its majority owner, Italian carmaker Fiat SpA, brought it out of bankruptcy four years ago.

“The insistence on quality that was introduced with the new Chrysler back in 2009 is forcing a level of scrutiny that is certainly unusual for Chrysler historically,” Marchionne said.

Chrysler’s first-quarter sales suffered because it was slow to release new versions of the Ram pickup and Jeep Grand Cherokee SUV, two of its most popular vehicles.

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