Chrysler Net Up Despite 20% Rise in Incentive Costs

Chrysler Corp., the No. 3 U.S. auto maker, Monday reported a higher profit for the second quarter despite a 20% increase in the cost of incentives aimed at enticing buyers.

But industry analysts, citing soft industrywide sales and the heavy incentive programs, said they were pessimistic about the company’s outlook for the rest of the year.

Chrysler said it earned $341 million, or $1.46 a share, up from $320 million, or $1.45 a share, in last year’s second quarter. Sales climbed to $10.11 billion from $9.34 billion.

Chrysler was the only U.S. auto maker to post a year-over-year improvement. General Motors Corp. on Thursday said net income fell 3% to $1.45 billion while Ford Motor Co.’s earnings fell 16% to $1.40 billion.

Expects Sales Drop

Although Chrysler’s performance came in on target, several analysts cut their forecasts of 1989 and 1990 earnings.

Chrysler last week announced a $1-billion cost-cutting program, including layoffs of 2,300 white-collar employees. The auto maker has said it expects industry car and truck sales this year of 14.8 million, down 6% from 1988, and thinks that sales will drop next year to 14.2 million.