c.2013 New York Times News Service
c.2013 New York Times News Service
DETROIT — General Motors and Chrysler will forever be linked as the two Detroit car companies that needed government bailouts in 2009 to survive.
But their comebacks since then have taken different paths, as their third-quarter results showed Wednesday.
General Motors, the largest of the domestic automakers, said that it earned $698 million in the third quarter, a 53 percent drop from the same period a year ago.
The results, which were affected by a special charge to repurchase preferred stock, indicate that GM is still struggling for consistency since its bailout and bankruptcy four years ago,
By contrast, Chrysler, the smallest Detroit automaker behind GM and Ford, said its earnings had increased 22 percent to $464 million, compared with $381 million in the third quarter of 2012.
The strong performance by Chrysler is a reflection of its nimble, product-oriented culture, which has flourished under Fiat, its Italian parent company.
While GM has made big strides in downsizing its brands, models and production capacity, it still lags behind Ford in profits in its core North American market.
“GM is still in a rebuilding process,” said Karl Brauer, an analyst with the auto research firm Kelley Blue Book. “It’s smaller and stronger than before, but they are retrenching.”
The company continues to replace its model lineup methodically, with new versions that have better quality and improved features.
Yet in the United States, GM is losing some ground in a resurgent market driven by consumers that need to replace aging cars and trucks.
In the first nine months of the year, GM sales increased 7.6 percent in the United States, compared with a rise of 8.1 percent for the overall market. Ford’s sales in the United States, by comparison, were up 12 percent, and Chrysler’s sales have risen 8.7 percent.
In the third quarter, GM reported a 17.3 percent market share in the United States, down from 17.6 percent a year ago.
GM’s chief executive, Daniel F. Akerson, said Wednesday that the company should get credit for streamlining operations and adopting tighter management controls since its $49.5 billion federal bailout.
“Consistency is the name of the game,” Akerson said in a conference call with analysts and reporters. “Given how far we have come, we’re well positioned for the future.”
The company is slowly shedding its dreaded nickname, Government Motors, which came with the bailout.
The Treasury Department, which had owned about 61 percent of GM after the bailout, now holds a 7 percent stake. The government recently estimated that taxpayers would ultimately lose about $9.7 billion on its overall investment in the company.
GM’s revenue during the third quarter increased about 4 percent to $38.98 billion, up from $37.57 billion. But its worldwide unit sales were flat. The company said it sold 1.58 million vehicles during the quarter, compared with 1.57 million last year.
Its best performance came in North America, where it reported a pretax profit of $2.18 billion, up from $1.71 billion in the third quarter of 2012.
GM’s overseas operations had spotty results. The company said its European operations were improving but were still posting heavy losses. It had a pretax loss of $214 million in the quarter, versus a $487 million loss last year.
Pretax earnings in its Asian division, which includes China, fell to $299 million, down from $761 million in the same period last year.
GM is banking on improved sales of its pickup trucks, which were recently redesigned, to increase earnings. The company is also introducing new versions of full-size SUVs like the Chevrolet Suburban.
For its part, Chrysler is benefiting from its intense focus on improving high-profit products like the Jeep Grand Cherokee SUV and the Ram pickup.
Chrysler is also building on its reputation for creative marketing with a series of tongue-in-cheek ads for the new Dodge Durango SUV featuring actor Will Ferrell.
“They are kind of the hooligan of the three Detroit companies,” said Brauer, the auto analyst. “They take chances and do things that the other two aren’t willing to do.”
But Chrysler hardly rests on its laurels. It accounts for the bulk of the profits earned by Fiat, which owns 58.5 percent of the U.S. company.
Manufacturing errors on its new small SUV, the Jeep Cherokee, stalled early production of the vehicle. But those issues have been addressed, said Sergio Marchionne, who serves as chief executive of both Fiat and Chrysler.
“The important thing for us is to continue to focus,” Marchionne said in a conference call with analysts Wednesday. “The industrial machine is pumping on all cylinders as we speak.”
He added that Chrysler was getting closer to an initial public stock offering to satisfy the demands of its second-largest shareholder, a health care trust for retired autoworkers.
The trust has formally requested the offering as a way to cash out some of its 41.5 percent interest in Chrysler.
Fiat had hoped to buy the trust’s entire stake and consolidate the Italian and U.S. companies into one global carmaker. But negotiations between Fiat and the trust have faltered, Marchionne said.