Chrysler Recoups In 2Q, Still Loses $172 Million
DETROIT (AP) — A year after emerging from bankruptcy protection, Chrysler Group LLC said Monday that growing car and truck sales helped it narrow its second-quarter loss to $172 million.
The U.S. and Canada are Chrysler's primary markets, and both have seen increased demand for cars and trucks since a recession-related slump last year. Chrysler said revenues rose 8.2 percent to $10.5 billion compared with the first quarter, largely because of a 22 percent jump in sales.
This is the first time Chrysler has reported a second-quarter profit since 2007, when it made $549 million while being taken over by private-equity group Cerberus Capital Management. The two quarters are tough to compare since Chrysler has been though a huge restructuring since then.
Chrysler has been run by Italian automaker Fiat SpA since leaving bankruptcy protection in June 2009.
Chrysler got a boost in the last few months with the release of the 2011 Jeep Grand Cherokee, the first new vehicle Chrysler has released since Fiat took over. It plans more than a dozen new and refreshed products in the latter half of this year, including a revamped Chrysler 300 sedan and the U.S. debut of the Fiat 500 minicar.
Chrysler said its U.S. market share has been climbing steadily, from 8.1 percent at the end of last year to 9.4 percent at the end of the second quarter. Still, Chrysler's share is down from 12.9 percent in the second quarter of 2007.
Chrysler said it expects to break even or post an operating profit this year and may raise that forecast when it reports third-quarter results. Chrysler reported an operating profit of $183 million in the second quarter, up 28 percent from the first quarter.
"Chrysler Group is on track to achieve its goals, yet an extraordinary amount of work still lies ahead," Chrysler CEO Sergio Marchionne said in a prepared statement.
But there is some weakness behind the numbers. According to data obtained by The Associated Press, a large percentage of Chrysler's U.S. sales are going to low-profit rental-car companies and government and commercial fleets. Chrysler was the only major automaker to see a drop in retail sales — or non-fleet sales to individual buyers — in the first six months of the year. Retail sales rose 12 percent on average for the industry, but Chrysler's dropped 21 percent.
Chrysler also has a stigma, in some buyers' minds, because it accepted government bailout money. Marchionne has said Chrysler will repay $15.5 billion in aid from the U.S. and Canadian governments by 2014.
Chrysler's crosstown rival General Motors Co. may end up paying off its own government loans much faster. GM, which took $50 billion in aid, reported a first-quarter profit of $865 million and is expected to post a second-quarter profit later this week. It plans to file paperwork soon for an initial public offering that would pay off much of its government debt. Marchionne hasn't committed to any timing for a Chrysler public offering.
Chrysler's other chief U.S. rival, Ford Motor Co., didn't take government aid and recently reported a $2.6 billion quarterly profit, its fifth straight.