Industry news
DaimlerChrysler AG posted a substantially higher operating profit during the third quarter, but its net income dropped and its revenue grew only 1 percent in the face of difficult economic conditions in Europe and North America.

The German-American automaker reported its net fell 22 percent in the third quarter to million or 87 cents per share. Revenues increased 1 percent to .9 billion and operating income jumped 155 percent to $1.68 billion. The increase in operating income was driven by Chrysler Group, which finished the quarter with an operating profit of million. Last year, the Chrysler Group posted a million loss during the same period as it was struggling to launch its turnaround plan.

Manfred Gentz, DaimlerChrysler’s chief financial officer, now expects DC to post a billion profit for 2002 even though demand for new vehicles is now expected to drop. “The fourth quarter will be one of the weakest of the year. The total volume for 2003 also is expected to go down,” said Gentz, who noted that uncertainty about the economy and the international situation has grown steadily in recent weeks.

Benz and bruises
The company’s financial results exceed analysts’ expectations, but during a conference call analysts pressed Gentz to explain the results from Mercedes-Benz.

The Mercedes-Benz unit boosted its revenues 6 percent to .1 billion but its operating dropped 2 percent to million, according to the company's financial statement. DaimlerChrysler assumes that, despite the difficult market conditions during 2002, the luxury-car group will “still equal the high figures for unit sales, revenues and earnings achieved in 2001 and will increase its market share,” said Gentz, who noted that new car sales in Germany have now fallen for three consecutive years. Mercedes-Benz, however, has several new models in the pipeline, he noted.

Gentz also said Chrysler’s turnaround is ahead of schedule. The Chrysler group now expects to post another profit in the fourth quarter and will finish the year with a solid profit in a very difficult competitive environment, Gentz said. Strong sales of the Jeep Liberty, Dodge Ram pickup and PT Cruiser also helped propel Chrysler into the black, Gentz noted. Under the original turnaround plan outlined in 2001, the Chrysler Group was supposed to break even in 2002, said Gentz. So far this year, the Chrysler Group’s operating income has now topped million, compared to a loss of .8 billion during the first nine months of 2001. The Chrysler Group is continuing to prospect for additional cost savings that would help keep the turnaround rolling and is now spending less on incentives than rival General Motors while maintaining its market share, Gentz noted.

DaimlerChrysler’s Commercial Vehicle Group, which also has struggled for the past couple of years, posted higher operating income during the third quarter despite generally weak demand around the world. The commercial vehicle group’s revenue of .1 billion was similar to last year’s level. But the group’s operating income of million was significantly higher than both the second quarter of 2002 and the third quarter of 2001 when it posted operating income of only million.

DaimlerChrysler Services’ operating income, excluding one-time effects of million, showed a 21 percent increase over the million operating profit posted in the third quarter of 2001.

Excluding special items, the financial services unit’s operating income jumped 102 percent, DaimlerChrysler reported. The increase was primarily due to lower costs, more favorable refinancing conditions and a considerable improvement in the marketing of off-lease vehicles. Gentz also said Mitsubishi Motors expects to achieve further improvements in operating income and will make a positive contribution to DaimlerChrysler’s operating profit.


Jac Nasser has been gone for a year, but the former CEO’s power plays continue to haunt the Ford Motor Co.

Ford actually beat expectations by posting a million or 12 cents operating profit for the third quarter — but wound up losing million, or 18 cents per share, after a one-time charge for writing off its investments in Kwik-Fit, a vehicle-repair chain in Europe, and Collision Team of America. Both companies were acquired by Ford under the Nasser regime.

Dispelling notions
Ford executives, meanwhile, sought to dispel complaints that Ford's turnaround effort is sputtering. William Clay Ford Jr., the company’s chairman and chief executive, said the automotive giant’s third quarter revenues increased 9 percent to .6 billion and worldwide vehicle sales during the third quarter also increased by 9 percent over the third quarter of 2001.

"The fundamentals of our business are improving, as evidenced by increases in our revenue and vehicle sales, improvements in our market share and tangible progress on cost efficiencies," said Ford.

Losses by the company’s North American operations dropped to million in the third quarter, compared with a loss of million one year ago when it became apparent the company was in serious trouble. The automaker’s losses in Europe increased during the third quarter to million, due to the introduction of a new vehicle by Jaguar and rising marketing costs, and jumped to million in South America where the economy has turned sour.

Looking ahead
Allan Gilmour, Ford's chief financial officer and vice chairman, told assembled press and analysts that Ford now expects to make a profit of about 40 cents per share in the fourth quarter. The company's market share has stabilized, Gilmour said as he defended Ford's financial position, which has come under serious scrutiny during the past month.

The major problem, as at General Motors, is unfunded pension liabilities. The company's pension fund has lost about 15 percent of its value this year, and the drop in asset values has left the pension funds underfunded by about billion, according to one estimate. Even so, Ford Motor Credit remains stable and has not been adversely impacted by either the zero-percent financing or rising credit losses, Gilmour said. In fact, its earnings improved during the third quarter, Gilmour said.

Hertz, another Ford subsidiary, reported a third quarter profit of million, up from last year's million profit in the third quarter. The continued recovery of business and leisure travel is the principal reason for the increase.

Nick Scheele, Ford president and chief operating officer, said Ford’s turnaround plan continues to trim the company's break-even point, too. Non-product costs have been trimmed by billion in 2002. In addition, the company is on track to offset all product cost increases and reduce its material costs by billion by mid-decade, according to Allan Gilmour, Ford’s chief financial officer.

William Clay Ford also told analysts the company was taking another hard look at its operating budget to see if it could trim additional costs by cutting back on travel, consultants and meetings.

In Other NEWS
By now we’ve all seen old spy photos and Cadillac’s own rendering of the glowing blue V-Series CTS, but for those who need to see the real thing themselves – here’s the nearly 350-horsepower 5.7-liter V-8 CTSv caught while crossing the California desert months ago. Although the V-Series “v” badges are absent, one can clearly see the all-new mesh-covered grille and larger air intake underneath, as well as the 15-spoke wheels and low-profile tires that prove this is no ordinary CTS. Cadillac’s range of V-Series vehicles — first reported by TheCarConnection.com this summer — will grow to include an XLRv roadster and likely an STSv when that full-size sedan is replaced in the ’05 model year.


OFFICER DIES, CROWN VIC LAWSUITS MOVE AHEAD
A Federal Panel on Multi-District Litigation has ruled that all class actions involving Ford Crown Victoria police cruisers be centralized in federal court in Cleveland, Ohio, before Federal Judge Donald C. Nugent, lawyers representing police officers suing the automaker report. "The effect of this announcement will be to allow all of the class action cases involving Ford Crown Victoria police cruisers to begin to move forward," said David Perry, of the Corpus Christi law firm of Perry & Haas. A few hours after the ruling came down, a Dallas police officer was killed while on duty in a Crown Victoria police cruiser that was struck in the rear and caught fire, according to the Dallas Police Department. More than a dozen police officers have now died while on duty in Ford-made police cruisers.