Chrysler Credit Rating Reviewed by Moody’s

Moody’s Investor Services Inc. announced today it is reviewing its credit ratings for Chrysler Corp., indicating concern about the company’s finances.

Fitch Investors Service Inc., another New York rating agency, said Chrysler was not under review by them.

News of Moody’s review comes as the nation’s No. 3 auto maker struggles with declining sales and market share and the loss of key executives.

“There has been deterioration of their performance in the marketplace, and competition is making inroads,” said Harold H. Goldberg, chairman of Moody’s corporate rating committee.

He said new minivans and sport-utility vehicles other auto makers are beginning to sell are pointed directly at Chrysler’s popular Dodge and Plymouth minivans and Jeeps. Much of Chrysler’s profit stems from sales of those vehicles.

Chrysler said Wednesday it had sold 752,935 North American-made cars and trucks through June 10, down 13% from the same period last year. The company’s share of the U.S. car market is 11.4%, down from 13.1% a year ago, and its portion of the truck market dropped to 21.8% this year from 23.2% last.

Goldberg said he expected Moody’s would decide whether to change Chrysler’s Baa2 rating by the end of the month. The Baa2 rating reflects a medium level of investment-grade securities.

Chrysler issued a statement calling Moody’s review “inappropriate and unwarranted.”

“Chrysler believes that its first-quarter profitability was impressive given the massive reduction in dealer inventories and points out that the company’s $1.5-billion ongoing cost-cutting program contributed substantially to those results,” the company’s statement said.

Chrysler said it earned $71 million in the first quarter of this year, down 80% from year-ago profits. In January, the auto maker’s earnings were dented severely by a big incentive program featuring $1,000 rebates on Dodge Caravan and Plymouth Voyager minivans.

Big incentive programs and temporary production cuts during January by Chrysler, No. 1 General Motors Corp. and No. 2 Ford Motor Co. slashed a huge buildup of unsold new vehicles.

Meantime, a report in Wednesday’s Wall Street Journal said Chrysler is considering buying Dollar car rental, one of the few remaining rental car companies not owned in large share by an auto maker.

Officials from Dollar and Chrysler, which already owns Thrifty Rent-A-Car System Inc. and Snappy Rental Inc., declined to confirm or deny the report.