Chrysler has some good news, but challenges remain

By Michelle Krebs
Edmunds.com

(August 10, 2010) Chrysler Group LLC reported Monday an improved financial picture in the second quarter, but the automaker clearly has more work ahead.

Chrysler narrowed its net loss to $172 million in the quarter (from $197 million in the first quarter). Chrysler earned an operating profit and increased the amount of cash it has on hand.

"The second quarter operating profit confirms that Chrysler Group is on track to achieve its goals, yet an extraordinary amount of work still lies ahead," Chrysler/Fiat CEO Sergio Marchionne said in a statement.

The automaker, now run by Italy's Fiat, said it remains on target to at least break even on an operating basis for full-year 2010 but will revise upwards that forecast if third-quarter results are strong.

 "Customer traffic in our dealerships and confidence in the company's future continued to grow 2011 Jeep Grand Cherokee - 270.JPGwith the launch of the all-new 2011 Jeep Grand Cherokee, one of the signature vehicles for Chrysler Group," added Marchionne, who reminded that 2010 is" a year of transition and stabilization" for Chrysler.

The automaker's product line, which has not been updated much in recent years, will have 16 new or refreshed products launching later this year. They include: the new Chrysler 300, Dodge Charger, a Dodge CUV, the Fiat 500, and the Chrysler Sebring.

Chrysler "must continue to be rigorous, disciplined and focused on the task at hand," Marchionne warned.

Indeed, Chrysler's cross-town rivals are making money. Ford reported a $2.6-billion profit for the second quarter. General Motors is expected to report positive earnings later this week.

The highlights of Chrysler's second quarter ended June 30 were:

• an operating profit of $183 million, an improvement of $40 million from the first quarter of this year. First-half operating profits totaled $326 million;

• net revenues of $10.5 billion, an 8-percent improvement from $9.7 billion in the first quarter. First-half net revenues came in at $20.2 billion;

• cash on hand increased to $7.8 billion, bringing Chrysler's available liquidity to more than $10 billion.

• market share improved to 9.4 percent in the U.S., from 9.1 percent in the first quarter. Canada market share remained strong at 12.9 percent.

Michelle Krebs is senior analyst and editor at large for Edmunds.com.