Chrysler Sees Best First Quarter Profits Ever

04/18/96

Chrysler announced that they were rolling in dough after a record first quarter. The Corporation saw high demand for trucks and minivans, enjoyed surprisingly strong car sales, and doubled their profit to just over $1 billion. Predicting that their hand over fist money grab would continue through the spring selling season, the corporation increased it's national industry sales forecast to 15.3 million cars and trucks (up 200,000 units).

Chrysler's $1.005 billion first quarter earnings ($2.61 per common share) exceeded Wall Street's fantasies and surpassed last year's first quarter results ($496 million or $1.23 per share) twice over. Chrysler said the figures from the previous year were depressed because of a $350 million cost of launching the 1996 line of minivans, a $96 million dollar accounting change related to rental car sales, and $71 million to replace faulty minivan rear door latches for vehicles already sold.

The corporation says 1996's glowing first quarter results include the costs of a recall for faulty anti-lock braking systems (reported earlier this week) and the costs of making peace with Kirk Kerkorian and settling litigation with Lee Iacocca. Estimated costs of settling with Iacocca and Kerkorian hit $30 million. The company did not release info on the estimated costs of the brake recall.

Chrysler's per vehicle profit rose almost $400, rising from $830 in 1995 to $1,200 in 1996. The company credited their mix of highly profitable minivans, sport utility vehicles, and pickups. The profit margin on each vehicle remained strong despite an increase in incentive spending of about $50 per vehicle: 1995 incentives rang in at $590 per vehicle while 1996 incentives hit $640.

Although incentives have generally increased, the automaker is looking forward to getting even more money out of consumer pockets by reducing them on some new trucks to be introduced this year, including the Dodge Dakota mid-size pickup truck and the Jeep Wrangler and Cherokee sport utility vehicles.

Chrysler Chief Financial Officer Gary Valade said, "We have some opportunities to take incentives down." He continued, "I would not jump to the conclusion that the only way for incentives to go from this base is up."

Chrysler's Dodge Ram pickup was redesigned three years ago and has since become the fourth best selling vehicle in the United States, out selling perennial favorites like the Ford Taurus and the Honda Accord.

Paul Dever -- The Auto Channel