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Chrysler Still Has a Long Way to Go, But Q3 Was an Improvement

Chrysler reduced its net loss in the third quarter to a net loss of $84 million, an $88 million improvement from the second quarter. Chrysler also has more cash coming in than going out, but a third-quarter net loss for Chrysler is still a net loss, while Ford (F) and General Motors are posting profits.

Chrysler highlighted the fact that it had an operating profit of $239 million. The company also raised its outlook for the full year for revenues, operating profit, pre-tax earnings and cash flow.

That's another way of saying still no net profit any time soon, at least not for a full year. Year to date, Chrysler had a net loss of $453 million after nine months. Still, Chrysler deserves credit for piling up cash, after predicting earlier this year that it would have a negative cash flow.

All of the Detroit car companies are stocking up on cash to sustain themselves while consumer demand is slow to recover. Chrysler had $8.3 billion cash on hand at the end of September, up from $7.8 billion at the end of the second quarter. Total liquidity was more than $10.5 billion, the company said. That includes credit that hasn't been drawn on.

Chrysler's operating profit was $239 million in the third quarter, up 31 percent from the second quarter. The redesigned 2011 Jeep Grand Cherokee drove most of that improvement, since it's commanding a higher price than the vehicle it replaced.

"We knew when we began this reconstruction process that the road back would
be a long one," said CEO Sergio Marchionne in a written statement."We've hit some key milestone and we've made progress in
important areas. We have laid the groundwork for a successful
transformation," he said.

Chrysler has the longest road to recover from last year's bankruptcy for Chrysler and GM, plus a close brush with bankruptcy for Ford. Of the Detroit Big Three, Chrysler is the smallest, the most dependent on the U.S. market, and historically the most dependent on truck sales. It emerged from bankruptcy as a junior partner to Italy's Fiat Auto.


Photo: Chrysler
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