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Chrysler billion loss highlights crisis

Strong signals of crisis in the US car market are being sent by the three key players. Chrysler is flagging up an operating loss of 1bn euros this quarter, GM has warned of poor results, and Ford's US sales in May were down more than 5 per cent.

Chrysler, the US business of the DaimlerChrysler group, dragged its parent into losses two and and a half years ago and is still underperforming. Chrysler car sales were down 3 per cent in May.

The group is now looking for a 2003 group operating profit of about 5bn euro after previously saying it hoped to beat last year's 5.8bn result.

The group this week launched a major programme of sales incentive to bolster Chrysler sales – including 0 per cent finance or cash allowances of up to $4500 on selected vehicles.

It is believed that it was the company's savage discounting policy which led to the resignation of its sales and marketing chief, Jim Shroer, last Friday.

Meanwhile, GM chief executive Rick Wagoner yesterday told shareholders that he was disappointed in the company's sales performance so far this year. GM's US sales in April were down by 9 per cent, in spite of record levels of rebates and finance deals.

And Ford's US sales were down by 5.7 per cent in May – again, in spite of heavy discount deals. And the company yesterday announced it is to cut production by 15 per cent in the third quarter.

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