Chrysler lowers sales outlook for 2006

The Associated Press/PARIS

By MATTHIAS KRUST

SEP. 28 8:28 A.M. ET Chrysler Group, which like its American peers General Motors Corp. and Ford Motor Co., has experienced tough sales in the U.S., said Thursday it is lowering is vehicle sales outlook for the rest of the year.

The group, part of German-American automaker DaimlerChrysler AG, previously expected its 2006 sales figures to remain stable at around 2,826,100 cars from last year. But in the first eight months of this year, sales of its Chrysler, Jeep and Dodge brands have dropped by 10 percent to just less than 1.5 million cars.

"On the whole year, we believe that the decline will be less than 10 percent with stabilizing sales in the remainder of 2006," Joe Eberhardt, Chrysler's head of sales and marketing, told Dow Jones Newswires at the Paris Auto Show.

He said that sales are expected to pick up with the rollout of eight new models that boast lower fuel consumption, noting that consumers are looking for cars with better mileage in light of higher gas prices.

Eberhardt said he expected 2007 sales to be above the final tally of 2006's results.

DaimlerChrysler recently disclosed that Chrysler would have a loss of nearly euro1 billion ($1.27 billion) instead of an expected profit, and issued a profit warning.

That, in turned, caused DaimlerChrysler to reduce its profit outlook to euro5 billion ($6.3 billion) from euro6 billion ($7.6 billion).

But Eberhardt said that Chrysler was set to break even by the fourth quarter.

"There will be no further cuts in production," he said, adding that Chrysler's pervious capacity utilization -- a number that shows the extent to which fixed costs are covered -- had been at a competitive 95 percent. "Our capacity utilization will increase significantly in the year to come."

Shares of DaimlerChrysler fell more than half a percent to euro39.64 ($50.28) in Frankfurt trading.