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Chrysler Jumps On the Profit Bandwagon, Up 5.2%

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On: Mon, Nov 8, 2010 at 1:05PM | By: John Welch


Chrysler Jumps On the Profit Bandwagon, Up 5.2%

It seems good fortune is shing on all three of the established US automakers with Chrysler announcing a $239 million operating profit for the third quarter. On the heels of GM and Ford announcements espousing essentially the same good news, Chrysler  is bringing in more revenue through an improved product line up as well as higher average transaction prices. Chrysler is currently in the process of releasing 16 new or drastically improved models, which should translate to even more success.

Posting a net loss of $84 million, the Pentastar brand is seeing a turnaround in operating costs as well. Down from the $172 million net loss of a quarter ago, this represents Chrysler's smallest quarterly loss since its government-subsidised bankruptcy 17 months ago. This all translates into positive cash flow for Chrysler; the company expects to turn $500 million in positive cash this year. The original company forecast predicted a billion dollar loss for 2010. Not bad!

Chrysler is still hemoragging money in a few different ways. First, it is losing money from higher costs associated with seasonal plant changeovers, and is still suffering interest expenses from the bankruptcy—to the tune of $899 million dollars. Does anyone else feel like these are such large numbers they must be made up?

The talking heads are bullish on Chrysler's future. Morgan Stanley auto analyst Stuart Pearson had this to say, "We think Chrysler may prove to be one of 2011's most surprising success stories. Worldwide Chrysler sales dipped 1 percent to 401,000 units during the latest period. But Chrysler's third-quarter U.S. sales rose 20 percent to 293,001 cars and light trucks."

What we have here is an American car industry on the rebound. All three companies have been doing well, and Chrysler probably doesn't deserve it. They know that they have produced rolling garbage for a long time, and are determined to change that perception. The new Ram trucks are as competitive as they have ever been, new SUVs are popping of the Chrysler lines like hotcakes, and the new fleet of Chargers should turn out to be cash cows. Does Italian ownership really help this much? Considering the mess made by Cerebus and Daimler, Sergio Marchionne and his team at Fiat are doing a bang-up job righting this wildly listing ship we call "Chrysler". The company has already exceeded its forecast for as much as $200 million in operating profit for all of 2010.


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James Roberts | 1:50PM (Mon, Nov 8, 2010)

According to the NY Times they are paying hundreds of millions in intrest on goverment loans and the public can sure use the money. It is amazing that everyone thinks that the TARP money was all a complete loss. We should hear more from GM and their earning on Wednesday.



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