DaimlerChrysler warned Wall Street investors the struggling company may likely show a $1.1 billion loss in the second quarter. Not since Chief operating Officer Wolfgang Bernhard captured the helm at Chrysler two years ago has the car giant shown this type of earnings warning. A restructuring in 2001 laid claim to 26,000 lost jobs for the Detroit auto maker. Some analysts suggested the move was enough to return DamilerChrysler to a profitable status but now breaking even may be the restructured business target. The German-American company blames higher than expected incentives and direct competition from General Motors for the projected loss. Chrysler claims to have 518,000 unsold models setting on car lots around the country and is cutting production by 10% for the second quarter. Chrysler suggests that GM can afford to out-spend them in the area of consumer incentive and the hurt is starting to show up in the bottom line. Chrysler just doesn’t have the pockets deep enough to match GM, said Art Spinella, who follows the auto industry for CNW Marketing/Research. GM is defining what incentives are going to be. Higher GM sales volume has caused concern for Chrysler as they struggle to compete with the GM incentive programs. No further job loss is expected at Chrysler and the auto maker is not backing down from offering consumer incentives. What this means to NASCAR Dodge teams is difficult to gauge at this point as further cut-backs may show up on the race track in the form of less capital investment.( Insider Racing News )(6-11-2003)
