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Chrysler reports best quarterly net earnings in 13 years as bankruptcy memory fades
DETROIT (AP) ' Chrysler followed its strong first-quarter sales with a big profit, sending its 2009 brush with financial death farther into the rearview mirror.
The Auburn Hills, Mich., company made a net profit of $473 million, its best quarter in 13 years, mainly on the back of strong U.S. sales. From January through March, Chrysler's sales were up 39 percent as customers bought more Ram pickups, Jeep Grand Cherokee SUVs and Chrysler 200 midsize sedans.
Not bad for a company that almost died three years ago. A government auto task force deadlocked on whether to save the company in 2009, with the tie broken by President Barack Obama.
Chrysler's first-quarter profit was more than four times the $116 million that the company made in the first quarter of last year. It was Chrysler's best performance since the third quarter of 1998 when it made $682 million during the pickup truck and SUV boom.
Chrysler made more in the first quarter than it did during all of 2011, mainly because of a huge accounting charge last year for refinancing and the government loans that saved it from the auction house.
The refinancing helped to boost Chrysler's first-quarter earnings. The company said it saved $71 million during the quarter because of the refinancing, which was finished last May.
Another reason Chrysler made so much money is because it's generating more cash every time it sells a car or truck. It's getting an average of $29,234 per vehicle in the U.S., up almost 5 percent over last year, according to the TrueCar.com auto pricing website. When sales and prices both rise, that generates more revenue and profit. Revenue for the quarter rose 25 percent to $16.4 billion.
Chrysler worked overtime for the past two years to revamp 16 of its models in an effort to make them more appealing to consumers. The results have paid off with steady sales increases through 2011 and into 2012.
The company also expressed optimism for the entire year, repeating a forecast that it would make $1.5 billion in 2012.
It has reason to be optimistic. Total car and truck sales in the U.S. are running at an annual rate of 14 million so far this year. That would be a healthy increase over last year's 12.8 million. The average age of vehicles on U.S. roads is nearing 11 years, and pent-up demand is helping to kick-start sales. Chrysler should share in the growth. Last year it raised its U.S. market share to 11.5 percent, from 9.4 percent a year earlier.
Chrysler also is about to launch the new Dodge Dart, its first decent compact car since the bug-eyed Neon in the mid-1990s, and a refreshed version of the Ram pickup, its top-selling vehicle, is coming later in the year.
Chrysler and its financing arm needed $12.5 billion from U.S. taxpayers to survive three years ago. The recession, which devastated auto sales, brought the company to the brink of financial ruin. Of the original Chrysler bailout, $11.2 billion has been repaid. The U.S. Treasury Department says it won't recover the remaining $1.3 billion.