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DaimlerChrysler Earnings Disappoint

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Fourth-quarter earnings fell 63% for DaimlerChrysler, and the company predicts a weak first half of this year resulting from disappointing Mercedes profits.

“The results are clearly below expectations, and the main problem is Mercedes,” said Karl Huber of Activest Investment. “Mercedes is fully dependent on the brand image and impeccable quality is absolutely indispensable for it.”

According to a Bloomberg article,

“Net income dropped to 526 million euros ($677 million), or 52 euro cents a share, from 1.4 billion euros, or 1.39 euros, a year earlier, Chief Executive Officer Juergen Schrempp said today at a Stuttgart, Germany, press conference. Mercedes Car Group earnings before interest and tax plunged 97 percent to 20 million euros.

Quality deteriorated and Mercedes lost market share as Schrempp spent 4 billion euros reorganizing Chrysler after the 1998 acquisition of the U.S. carmaker. Mercedes ranked 29th out of 37 brands in a June reliability study of three-year-old cars by J.D. Power & Associates. Bayerische Motoren Werke AG is closing a gap with Mercedes and may become the biggest maker of luxury cars.”

The company does expect profits to increase 2006 and 2007 with the introduction of new vehicle models.

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DaimlerChrysler Earnings Disappoint
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