During the second quarter, Chrysler Group announced two significant investments in its Kokomo, Ind., facilities. In May, the Company announced a $43 millionJune 9, an additional $300 million investment in new equipment and tooling that will expand operations at the Kokomo Casting and Kokomo Transmission plants. On investment in Indiana Transmission Plant I and Kokomo Casting was announced that will ready the plants for the production of a new, highly fuel-efficient, eight-speed automatic transmission. The investments will result in nearly 1,600 new or retained jobs.
As part of the process to integrate the distribution activities of Fiat Group Automobiles and Chrysler Group in Europe, in May 2010, the two companies began the reorganization and integration of the Chrysler and Lancia sales networks. This integration will lead to the creation of an integrated network of over 1,000 dealerships across Europe by 2014.
Chrysler Group expects that its European and South American sales will double between 2010 and 2011, to nearly 200,000 sales, an increase largely attributable to Chrysler's ability to leverage Fiat's international distribution networks. During the second quarter, distribution of Chrysler Group vehicles under this new integrated business model began in Italy, France, Sweden, Denmark, Germany, Belgium and the Netherlands.
In May, Chrysler Group established an agreement with Santander Consumer USA to provide new-car financing at attractive rates to consumers with credit scores below 650, traditionally considered non-prime customers. Ally Financial remains Chrysler Group's preferred prime lender.
In addition to the Jeep Grand Cherokee, in the second quarter, the Company introduced an all-new 2011 Ram Chassis Cab commercial truck, the 2010 Dodge Viper SRT10 ACR-X special-edition model of America's ultimate sports car, and the Mopar® 2010 Dodge Challenger, the first-ever special-edition Mopar version of the Dodge brand's iconic American muscle-car.
Chrysler Group vehicles continued to win awards in the second quarter. The all-new 2010 Ram Heavy Duty and Dodge Nitro were named the Top Heavy Duty Pickup and Top Mid-Size Sport Utility, respectively, in the AutoPacific 14th annual Vehicle Satisfaction Awards (VSA). VSA is the industry benchmark for measuring how satisfied an owner is with their new car or light truck. Earlier in the year, the iconic Jeep Wrangler was named the "Best and Most Significant 4X4 Vehicle of the Decade" by Four Wheeler magazine editors.
On July 2, Chrysler de Mexico, a subsidiary of Chrysler Group LLC, entered into a financing arrangement with Bancomext and Nafin, for the Mexican peso equivalent of $400 million. The facility was fully drawn in July. The proceeds are to be used to finance the production of the Fiat 500 at the Toluca, Mexico plant.
The dealer arbitration process concluded in July with more than 70 percent of arbitrator decisions in Chrysler Group's favor. About 4 percent of the 789 dealers rejected during the bankruptcy process prevailed in arbitrations. Chrysler Group issued a Letter of Intent to each of the prevailing dealers to join Chrysler Group's dealer network, provided they meet financial and operational prerequisites.
On July 30, the Company announced that its Sterling Heights (Mich.) Assembly Plant, which was scheduled to close after 2012, will remain open beyond that date. Management is working with city and state officials to finalize certain related tax incentives. Chrysler Group will also add nearly 900 jobs on a second shift of production scheduled to start in the first quarter of 2011.
Pending the closing and reporting of Q3 financials, the Company confirms the following targets for the year:
- Net Revenues of $40 - 45 billion
- Operating Profit of $0.0 - 0.2 billion
- Modified EBITDA of $2.5 - 2.7 billion
- Negative Free Cash Flow of $1.0 billion
It is highly probable, in view of the Company's performance to date and our forecast of trading activity in the remainder of the year, that the Company will upgrade guidance for 2010 when announcing Q3 2010 results.
Management will hold an analyst conference call August 9 at 10 a.m. EDT to present the 2010 second quarter results. The call can be followed live and a recording will be available on the Chrysler Group website: www.chryslergroupllc.com.