Chrysler Posts Eighth Straight Quarterly Profit

Ford (NYSE: F  ) and General Motors (NYSE: GM  ) both posted strong second-quarter results last week from rising demand in the U.S. market. Both automakers make a bulk of their profit from full-size pickups, which continue to surge as pent-up demand unloads, thanks in part to an improving construction industry. The F-Series, Silverado, and Ram are up 22%, 24.7%, and 22.9%, respectively, this year through June. Even with success in the most profitable segment, Chrysler wasn't able to bring in as solid a quarter as its domestic rivals.

Results
Chrysler's top-line revenue for the second quarter was $18 billion, a modest increase of 7% from a year ago. Chrysler is the smallest of Detroit's Big Three automakers; this quarter, it trailed Ford and GM's respective revenues of $38.1 billion and $39.1 billion.

Chrysler's bottom line registered at $507 million for the quarter, a 16% increase from a year ago, and trailing far behind Ford and GM, who both brought $1.2 billion to their bottom lines in the second quarter.

What's impressive, though, is that all three domestic automakers were able to start winning back market share that had been in decline for decades. GM's market share has been flat for the year at 18.1%, but spiked in June to 18.9%. Ford improved from 15.7% last year to 16.5% this year, the largest gain by any full-line automaker. Chrysler had a slight increase over last year to 11.6%. 

Chrysler's global vehicle sales were up 10% to 643,000 for the second quarter. June marked the company's 39th consecutive month of sales gains, following the industry trend of steadily increasing SAAR numbers. Chrysler is also managing its inventory well with its dealers' days of supply at 68 days through June – right on par with last year's 67 days.

Caveats
It's good to see Chrysler post its eighth consecutive quarterly profit, but there's definitely some downside to the report that Ford and GM didn't experience. Chrysler actually reduced its year-end forecast for net income from $2.2 billion to a range of $1.7 billion-$2.2 billion. It made the same reduction to its forecasted year-end modified profit, taking it from $3.8 billion down to a range of $3.3 billion-$3.8 billion.

"Chrysler Group is poised for a very strong performance in the second half of the year, with the new Jeep Grand Cherokee and Ram 1500 pickup earning best-in-class recognition, and the all-new Jeep Cherokee now rolling off the line," Chrysler Group's chairman and CEO, Sergio Marchionne, said in a press release.

Bottom line
That quote from Marchionne reminds me exactly why I'll avoid Chrysler as an investment if it indeed has an IPO. It's so reliant on two vehicles for so much of its profits, and its Fiat counterpart is still struggling in Europe. Sure, Ford and GM both make a lot of money from the F-Series and Silverado, but both are making huge strides in smaller vehicles. Chrysler hasn't been able to clone its rivals' success in fuel-efficient segments. Until it does, I'll stick with Ford and GM as my domestic auto investments while the industry continues its rebound.

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  • Report this Comment On July 30, 2013, at 2:30 PM, AmericanFirst wrote:

    Great,

    Maybe Chrysler / Fiat can afford to payback the $1.3B the taxpayers lost on the Chrysler Bailout.

    http://money.cnn.com/2011/07/21/autos/chrysler_government_ex...

  • Report this Comment On July 30, 2013, at 4:41 PM, pwkrp wrote:

    @AmericanFirst, come up with some up to date news and you will see Chrysler paid back their bailout six years ahead of time in 2012. So even if they never paid it back it keep a lot of people working, keep a lot of companies going, keep the people who are working paying taxes were they live, keep small business going were they live. If Chrysler went under so would have a lot of others and the unemployment and warfare would have cost more than the bailout, and that money would have never been paid back. Maybe you don't like it when people are working and making a living and take care of them self's. Your one of the "ME" type of people, what is in it for "ME"

  • Report this Comment On July 30, 2013, at 5:04 PM, pwkrp wrote:

    I keep reading posts of folks slamming the bailouts and while I'm NO supporter of Obama I'd like to point out a few facts. In this instance however with both failing during the "great recession", the economic domino's are hard for most to imagine. Beyond the GM/Chrysler job losses, think of how many jobs would have also been lost as a result: Suppliers, shippers/truckers, landscapers and janitors/maintenance men (supporting all the dealerships), as just some of the examples. It's estimated that nearly 1million jobs would have been lost and that's simply not prudent during a time when millions were already being lost. Moreover if you look at Consumer Reports or GD Power you will find that unlike in the 1990s when Toyota and Honda DOMINATED the ratings, the GM/Ford/Chrysler offerings have improved dramatically. As such with the lone exception of legacy union costs the companies formerly known as the "big three" can compete with the import makers. In fact if it wasn't for Chrysler selling so well, it would be Fiat/Spa that would be going under. Now if we can only get people to pay back their student loans and those in the government to start paying their taxes, that would be impressive.

  • Report this Comment On July 30, 2013, at 7:44 PM, AmericanFirst wrote:

    PWKRP,

    I'm sorry, you just don't have the facts to support your comments. I posted mine in a link, let's see yours.

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