Automaker Chrysler Group lost money in the first quarter of 2014 despite big sales gains for the new Jeep Cherokee and Ram pickup models.
Chrysler posted a loss of US$690 million for the January-March period, which the company attributed to charges related to its merger with Italian automaker Fiat SpA – the two companies are in the process of combining to form Fiat Chrysler Automobiles, which will be based in London but maintain significant operations in both Turin, Italy, and Auburn Hills, Mich.
As part of the merger, Chrysler agreed to pay US$700 million to upgrade its factories, and took a US$672 million charge in the first quarter to meet those commitments.
According to a statement, Chrysler said profits were also hit by the weakening Canadian dollar, increased advertising spending and US$100 million in recall costs.
On the plus side, Chrysler’s worldwide vehicle sales jumped 10 per cent to 621,000. In the U.S., where Chrysler sells 75 per cent of its cars and trucks, sales rose 11 per cent, far outpacing the one per cent average gain for the industry.
Chrysler also reported strong sales of the new Jeep Cherokee SUV, which went on sale at the end of 2013. Ram pickup truck sales were also up 25 per cent in the U.S.
In its statement, Chrysler said it remains on track to earn US$2.3 billion to US$2.5 billion this year outside of one-time items. It expects full-year revenue of US$80 billion.