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Global Automotive Leaders Chrysler, Volvo and Fiat Start 2012 with A Bang

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(Photo: Stock.xchng)
(Photo: Stock.xchng)

BUSINESS

  • Chrysler Q1 net profit of over $470 million best result in 13 years
  • Fiat announces 10-fold jump in Q1 profit to over $498 million
  • Volkswagen reports $4.2 billion profit, nearly double its 2011 first quarter profit; plans to launch production in China
  • Honda Q1 profit up by over 60% from 2011 to $883 million

As the global automotive market rebounds, manufacturing leaders Chrysler, Fiat and Volkswagen recently announced significant increases in first quarter profits: Chrysler’s net profit of over $470 million is its best result in 13 years; Fiat, having increased its stake in Chrysler to over 58% in early 2012, reported a 10-fold jump in profit to over $498 million; and Volkswagen’s $4.2 billion profit is almost double its 2011 first quarter profit.

With an over 11% increase in customer deliveries to 2.2 million vehicles, Volkswagen outclassed other automotive companies globally, particularly in Russia. Meanwhile, Chrysler has recovered nicely from 2009, when it needed a government bailout to survive, with a 39% increase in first quarter sales this year.

All three automotive leaders anticipate continued growth.

So far this year, Chrysler’s market share has risen almost 2% in the US from 2011 to 2012, and total revenue is projected at $1.5 billion for 2012. Fiat looks to merge with Chrysler completely by 2014, while Volkswagen has ambitions of beating its own 2011 record of over 8 million vehicles delivered.

Honda Bounces Back from Natural Disaster

Honda has also benefitted from the car market’s upward trend in early 2012, reporting first quarter profit up by over 60% from 2011 to $883 million. This marks a huge recovery from 2011, when production disruptions from the tsunami in Japan and floods in Thailand hit Honda the hardest among large Japanese car companies.

A strong yen also affected Honda’s overseas sales; however, sales in North America and Japan rose by almost 9%. The company is now looking to increase sales by nearly 30% in the coming year, hoping to set records worldwide.

Volvo hopes to capitalize on the surge in global cars sales with two or three new factories in China, presently the world’s fastest growing car market. At over 100,000 cars, Volvo’s Chinese sales last year were 24% higher than in 2012.

However, for Chinese authorities, Volvo is still a foreign company, thus cannot make cars there. Its only loophole around Chinese automotive regulations is to engage in a joint venture in China with Geely, its Chinese parent company since a $1.8 billion acquisition in 2010.

Volvo will need to not only complete the venture by the end of the year, but also get its own vehicle production license from Chinese authorities. Plans are well underway, and production is set to begin in Chengdu in 2013.

Key Statistics – Automotive Manufacturing Industry (source: MarketLine) 

  • In 2010, the automotive manufacturing industry worldwide brought in around $1.2 trillion.
  • Between 2006 and 2010, industry production volumes rose to over 126,150 thousand units in 2010, with a CAGR of 2.9%.
  • The industry value is expected to rise to over $1.7 trillion by the end of 2015, with a projected CAGR of around 7% from 2010 to 2015.

By Christelle Agboka for
Christelle Agboka is a freelance journalist based in Kingston, Ontario, who covers business and economy news.

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