Chrysler Net Falls 28% in Quarter

Chrysler said Thursday that its net income in the first quarter declined to $507.6 million, down 28.1% from last year’s record of $705.8 million, mainly because the company has exhausted the tax benefits that it built up during its financial crisis and is a taxpayer once again.

Chrysler’s pretax earnings of $725.1 million for the first quarter were actually higher than 1984’s level of $706.2 million.

But, unlike last year, when its earnings were shielded from taxes by the company’s use of tax-loss carry-forwards obtained from its huge losses during the recession, Chrysler had to pay $217.5 million in federal and state income taxes this year.

The earnings decline had been widely anticipated on Wall Street, since analysts knew that Chrysler was running out of tax benefits because it has become so profitable.

In 1984, Chrysler earned a record $2.38 billion. In the fourth quarter of 1984, when it reported net income of $609.7 million, Chrysler paid federal income taxes for the first time since its brush with bankruptcy in 1979.

Chrysler said its worldwide sales of $5.4 billion, up 10.2% from last year’s $4.9 billion, set a quarterly record, while its total unit sales of cars, trucks and vans rose 5.9% during the period. Sales-incentive programs begun during the first quarter helped Chrysler increase its share of the U.S. car market to 12.3%, up from 10.2% in the first quarter of 1984.

It sold 324,492 cars, including imports from Japan, in the United States during the quarter, up 24.1% from last year’s 261,540. Its truck and van sales rose 25.7% to a record 160,914, from 127,993 during the first quarter of 1984.

Chrysler’s work force continued to expand during the quarter. The company said its U.S. and Canadian employment rose to 101,341, up 7.5% from the first quarter of last year.