DETROIT – Chryslers almost total reliance on North America used to be a huge weakness, one that sent the company into bankruptcy protection.
Now its a major strength. The region is generating profits for the company while losses in Europe and slowing sales in South America and China are drains on other carmakers.
Chrysler, which sells almost 90 percent of its cars and trucks in the U.S. and Canada, made a $436 million profit in the second quarter. It was a huge turnaround from a year earlier, when the company lost $370 million, mainly because it refinanced government bailout loans.
The automaker, now majority owned by Italys Fiat SpA, also backed an earlier profit forecast of about $1.5 billion for the year. Such a performance would have been unthinkable three years ago, when Chrysler nearly ran out of cash and needed a government bailout to survive. Chrysler has emerged from bankruptcy protection with far lower costs, and it has saved money by using Fiat parts and expertise to engineer new models. Since exiting Chapter 11, it has rolled out a revamped Jeep Grand Cherokee, a highly profitable vehicle that saw sales rise almost 40 percent in the first half of the year. The company also is making money on minivans and Ram pickups, said Joe Phillippi, a former Wall Street analyst who is now president of AutoTrends Consulting in Short Hills, N.J.
The pickup market is picking up, and thats helping them a lot, he said.
Chrysler also is propping up Fiat. Like other automakers, the Italian company is struggling with falling sales as Europeans pull back on car buying. Last week, Ford reported that its second-quarter net income fell 57 percent, largely because of a loss in Europe.
Chryslers revenue rose a healthy 23 percent to $16.8 billion in the second quarter. It also paid less in interest last quarter than a year earlier, saving $50 million with the refinancing of its government loans.
The companys U.S. sales rose 24 percent in the quarter to 436,000, its best sales quarter since it left bankruptcy protection.