EARNINGS : Chrysler Net Soars 91%; Best Gain in Industry

Chrysler Corp. said Tuesday that its profit surged 91% in the first quarter, as the No. 3 auto maker led the industry with the biggest gains in earnings and sales for the period.

Chrysler attributed the improvement to a richer product mix, led by its new Plymouth Acclaim and Dodge Spirit cars, and strong sales of Jeeps and mini-vans.

Earnings jumped to $351 million, or $1.50 a share, from $184 million, or 83 cents a share, a year ago, when earnings were reduced $93 million, or 42 cents a share, for plant closing costs.

Sales rose 16% to $9.95 billion, a record for the period, from $8.56 billion in the 1988 first quarter.

“We had an excellent start to the year for 1989,” Chairman Lee A. Iacocca said. “Despite soft industry sales and rising raw material and health-care costs we posted one of our best first quarters ever.”

Chrysler cited growing demand for its new New Yorker and Dynasty automobiles, continued strong mini-van and Jeep vehicle sales, and increased attention to internal cost management.

Iacocca said: “Our newest additions, the Plymouth Acclaim and Dodge Spirit, are upscale from the K-cars they replaced. The Chrysler New Yorker, New Yorker Landau, Dodge Dynasty and Chrysler Le Baron coupe and convertible all are a step above their predecessors.”

The earnings showed the best percentage improvement within the industry.

General Motors Corp. had reported a 42% gain in profit in the first quarter to $1.55 billion on sales of $29.6 billion. Ford Motor Co. remained the most profitable of the Detroit Big Three, posting earnings of $1.64 billion, up from $1.62 billion, in the quarter. Sales were $22.82 billion.

While auto analysts praised Chrysler’s profit, which was within their forecasts, some said there is growing pessimism over the earnings outlook for the rest of the year.

“There’s concern how earnings will perform in an environment where incentive costs continue to escalate,” said auto analyst Jack Kirnan of Kidder, Peabody & Co. He said incentive programs designed to perk up demand are costing Chrysler $800 a vehicle in the second quarter, compared to $600 in the first.

Kirnan said other concerns are the generally weak car market and a light-truck market that is showing signs of a slowdown.

Chrysler said its U.S. car market share slipped in the quarter to 10.6% from 12.1% a year ago, primarily because it phased out its K-cars. But it said its share of the U.S. truck market increased to 19.6% from 19.1% last year, a record first-quarter performance.

The company said it countered sluggish industry sales with an incentive program announced at the end of the first quarter.