Chrysler Could Break Some Hearts on Valentines Day
Much like Ford, Chrysler is suffering with some budget woes.
According to The Motley Fool website, many consumers have switched from the SUV and pickup segment that currently comprises 70% of Chrysler sales, to more fuel-efficient cars. As a result, Chrysler has seen a $1.5 billion operating loss for its third quarter. On the flip side, Toyota, known for its fuel efficient models, reported a 7.3% profit gain today for its latest quarter on sales of 2.16 million cars. Motley Fool reports that Toyota is on track to unseat General Motors as the largest car maker; GM saw global sales fall to 9.09 million cars last year, while Toyota sold 8.8 million.
Chrysler executives are rumored to announce a new operating plan for the company on February 14, to create a leaner, meaner company. KYW TV in Philadelphia has reported that this plan could mean closing the Newark, DE plant. 2,100 people work at the 65 acre Daimler-Chrysler plant and it has been a Newark landmark for more than 50 years.
The location of the plant is said to be the biggest part of the problem. Ninety percent of the parts that are assembled at the plant come from the Midwest and the shipping costs are added into the price of the Durango and Aspen. The sales of the Durango and the Aspen have been sinking dramatically in the past year, in large part to higher fuel costs, and are two of Chrysler’s worst selling products.
The plant contributes more than $8 million to Delaware’s economy and a big chunk of that to Newark where Mayor Vance Funk is worried.”It definitely hurts and if you look at our downtown community, we have one of the strongest downtowns on the East Coast and they are part of that,” Mayor Funk told KYW reporter Marge Pala.
Chrysler is Newark’s second largest employer so merchants are bracing for the worst.
“There’s a lot of local customers that work for Chrysler that live in the immediate Newark area, so obviously with them closing down affecting their income affects how much money they have to spend on things,” said Jim Malone of Cameras Etc.
Workers are saying that it does not look good but they are hoping for the best concerning the announcement next Wednesday.
One interesting note that could affect matters– Chrysler recently spent $180 million dollars in modernizing the plant. We will keep our fingers crossed that Chrysler will find another way to save dollars.
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