Chrysler profit jumps 80% for quarter

New models, less debt, higher world sales propel car maker

10/30/2012

DETROIT — Chrysler said Monday that its third-quarter profit rose 80 percent on the strength of new models, less debt, and steadily growing sales in both U.S. and international markets.

The third-largest Detroit carmaker said that it earned $381 million in net income, up from $212 million in the same period a year ago. Revenue for the quarter was $15.5 billion, an 18 percent increase from $13.1 billion in the same period last year.

The results could be seen as the latest evidence that Chrysler's improbable comeback from its government bailout and bankruptcy was not only sustainable but accelerating.

''We've changed the conversation at Chrysler Group,” said Sergio Marchionne, the chief executive of both Chrysler and its Italian parent, Fiat. “We continue to work feverishly and are pleased to see that our all-consuming aspiration for excellence is translating into results.”

Chrysler's solid results are propping up the faltering European operations of Fiat, which was scheduled to release its third-quarter earnings Tuesday.

Mr. Marchionne may announce new moves to cut losses at Fiat, which is struggling to cope with the steepest decline in sales in Europe in nearly 20 years. He reportedly has considered building some Chrysler products in Italy, where Fiat factories are operating far below capacity.

But there's no need anymore to fix Chrysler, which has repaid its debt to U.S. taxpayers and totally revamped its product lineup since emerging from bankruptcy in 2009.

The company said its worldwide sales increased 12 percent in the third quarter to 556,000 vehicles. For the first nine months of the year, it sold 1.7 million vehicles, up from 1.4 million in the same period in 2011.

Before its financial collapse, Chrysler relied mostly on its pickups, SUVs, and minivans to contribute the bulk of its profit. The company was particularly vulnerable to swings in gas prices, which drove consumers to buy smaller, more fuel-efficient passenger cars from other manufacturers.

With the assistance of Fiat technology and parts, Chrysler has broadened its lineup to include a compact car, the Dodge Dart, that gets 40 miles per gallon of gas. The company is also putting more efficient engines into its bread-and-butter models such as the Jeep Grand Cherokee and Chrysler 300.

Marchionne on Monday reaffirmed Chrysler's full-year targets of $1.5 billion in net income and global shipments of 2.3 million vehicles.

Chrysler's balance sheet also continues to improve as its business grows. The company said it had $11.9 billion in cash at the end of the third quarter compared to $9.5 billion at the same point a year ago.

Chrysler's two U.S. rivals, General Motors and Ford, are expected to report lower earnings for the third quarter than a year ago, primarily because of growing losses in the troubled European car market. Ford was scheduled to report Tuesday and GM on Wednesday.

Mr. Marchionne, in an e-mail to employees, said the competition isn't showing any signs of vulnerability, so the company will have to keep fighting for its share of the market.

“We are going in the right direction, and I simply ask you to keep faith in Chrysler and in each other and keep working to shape this company,” he wrote.

Chrysler plans 66 new, revamped or special-edition cars and trucks by 2014, Mr. Marchionne wrote.

Even though it had a good quarter, Chrysler's rapid growth is starting to slow. Its U.S. sales last quarter fell about 4 percent from the second quarter and it faces increased competition from Honda and Toyota. The two Japanese companies have recovered from last year's earthquake and tsunami that hobbled their factories and left them short of models at U.S. showrooms.

The Associated Press contributed to this report.