Chrysler Posts a 3% Drop in Profit After $90 Million Fine
DETROIT — Fiat Chrysler Automobiles said on Wednesday that profits at its American subsidiary fell 3 percent in the second quarter, primarily because of a record civil penalty against the company for violating federal safety laws, reports the New York Times. The subsidiary, which encompasses operations of the former Detroit automaker Chrysler, reported net income of ... Read More »
DETROIT — Fiat Chrysler Automobiles said on Wednesday that profits at its American subsidiary fell 3 percent in the second quarter, primarily because of a record civil penalty against the company for violating federal safety laws, reports the New York Times.
The subsidiary, which encompasses operations of the former Detroit automaker Chrysler, reported net income of $598 million for the quarter compared with $619 million in the same period a year ago.
The decrease was attributed to a charge of $90 million for fines agreed to with federal regulators, as well as a $71 million charge to extinguish debt.
Last week, Fiat Chrysler signed a consent order with the National Highway Traffic Safety Administration to resolve the government’s wide-ranging investigation of 23 vehicle recalls covering more than 11 million vehicles.
The order called for a cash fine of $70 million and a commitment by the company to spend $20 million to satisfy safety performance requirements, including buying back defective vehicles.
Fiat Chrysler could be assessed another $15 million in penalties if further safety violations are discovered by an independent monitor, according to the order.
Last week, the company’s chief executive, Sergio Marchionne, said the Chrysler subsidiary had committed to overhaul its safety practices and recall procedures. “We need to comply 100 percent of the time,” he said.
While its results dropped from a year ago, Chrysler remains the Italian-American automaker’s most profitable business unit.
Revenue for the subsidiary, which include Chrysler’s North American and international operations, rose 11 percent during the quarter, to $22.6 billion.
Its worldwide vehicle sales increased 5 percent, to 780,000, in the quarter, from a year earlier. The subsidiary ended the quarter with a United States market share of 12.4 percent, which represented a slight increase from the second quarter in 2014.
The subsidiary also improved its cash position during the period, ending the quarter with net cash — excluding financial liabilities — of $2.1 billion. At the end of the first quarter, it had about $1.2 billion
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