Quarterly Profit at Chrysler Is Much Better Than Expected

Extending its upward trajectory in the struggling auto business, Chrysler Corp. said Tuesday that it earned $202 million in the third quarter, well above the expectations of Wall Street.

The results point to Chrysler as the only one of the U.S. Big Three to manage a profit in the third quarter. General Motors Corp. and Ford Motor Co. are expected to report losses next week.

Despite the anemic condition of the U.S. auto market in general, analysts say Chrysler is benefiting from its new status as the most cost-efficient manufacturer and from a wealth of high-profit vehicles in the only growing part of the business, light trucks.

Strong sales of its redesigned minivans, Jeeps and pickup trucks have let Chrysler gain nearly a full percentage point of market share this year, to 13% of all North American motor vehicle sales, despite a dearth of competitive passenger cars. The company hopes that gap will begin to shrink with the new LH line of mid-size cars being officially introduced today.

More significantly, according to analyst Maryann Keller of Furman, Selz Inc. in New York, Chrysler is building those cars for $500 below its per-vehicle production cost target, a gain that goes straight to the bottom line.

Chrysler managed a similar feat earlier this year when it introduced the Jeep Grand Cherokee. Built at a new $1-billion plant in inner-city Detroit, it is costing Chrysler $600 less per vehicle to build than expected, Keller said.

It was Chrysler’s second profitable quarter in a row and contrasted with a year-earlier loss of $82 million. Sales jumped 22% to $9.2 billion, a record for the traditionally slack third quarter. The $202-million profit compared to analysts’ forecasts of $110 million to $180 million.