Chrysler Group LLC has amended paperwork it filed with the U.S. Securities and Exchange Commission in advance of its initial public stock offering, raising new flags about the automaker’s turnaround efforts.
The Auburn Hills automaker deleted earlier references to its “successful new product launches” and acknowledged that problems with the introduction of its all-new Jeep Cherokee and other new or redesigned vehicles.
“For the past three years, we have encountered challenges in our operations with ... (l)aunch delays for certain of our vehicles, particularly the Jeep Grand Cherokee, Ram Heavy Duty and Jeep Cherokee in 2013, partially due to our plants and suppliers operating at or in excess of full capacity, causing lost production compared to our original planning assumptions,” the company stated, adding that this has “(i)ncreased costs due to employee overtime, expedited procurement of raw materials and parts, component banking costs, and other expenditures, all of which have driven up costs for manufacturing and logistics and, which, if not addressed, may further impact our profitability over the long term.”
The Cherokee, upon which much of the company’s hopes for 2013 rest, went into production in June. But the crossover only began shipping in October.
The automaker said it still plans to bring a diesel-powered Grand Cherokee to market by the end of the year.
Chrysler also acknowledged that its alliance with Italy’s Fiat SpA was resulting in less cost-savings than the two companies initially hoped.
“We believe our joint engineering and development cooperation has resulted in cost savings for us and we expect more savings to be generated in the future from ever increasing integration and higher vehicle sales volumes,” Chrysler stated. “However, management estimates that increased procurement integration with Fiat contributed significantly to creating approximately $450 million in cost savings for us in 2012, which was slightly lower than envisioned by our 2010-2014 business plan.”