Make us your home page

Ford, Chrysler second-quarter profits fall

DEARBORN, Mich. — Ford's ambitious plans to grow in Asia took a toll on its second-quarter profit, with higher costs to design and sell cars offsetting rising sales.

The company's net income fell 8 percent to $2.4 billion for the April-June period.

Ford blamed higher prices for steel and other commodities, but also said that after years of restructuring, the company is strong enough to spend heavily on growth.

Ford spent $400 million more on engineering and advertising its new vehicles than it did a year earlier.

Rival Chrysler Group also took a hit, reporting a loss of $370 million for the quarter. Like Ford, Chrysler said the loss was a sign of a healthier balance sheet.

Without a $551 million accounting charge for refinancing bailout debts to the U.S. and Canadian governments, Chrysler would have earned $181 million.

Revenue was $13.7 billion in the second quarter, up 30 percent from the same period last year.

Ford's worldwide sales were up 7 percent, and revenue rose 13 percent to $35.5 billion. But the company warned last month that its profit could slip, citing investments in future products.

Ford plans to roll out 15 cars in India and China over the next four years and, as a result, it's spending hundreds of millions more on product development than it did a year ago.

One reason sales softened in the United States was a lack of discounts. Both Ford and Chrysler were able to command higher prices for their cars and trucks last quarter, partly because of tight supplies of Japanese cars following an earthquake in that nation.

Chrysler's average selling price rose nearly 5 percent from a year earlier to $29,964 while Ford's rose 1 percent to $31,179, according to automotive website.

Both spent less on rebates and other deals.

Ford, Chrysler second-quarter profits fall 07/26/11 [Last modified: Tuesday, July 26, 2011 10:56pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.

Join the discussion: Click to view comments, add yours