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Chrysler Q3 Earnings Surge 80%

“We’ve changed the conversation,” says CEO Marchionne.

by on Oct.29, 2012

Strong demand for the new Dodge Dart helped drive up Chrysler sales and earnings.

Buoyed by the largest sales increase among all domestic makers, Chrysler saw its earnings surge by 80% during the third quarter, while revenues gained 18%.

The U.S. maker – which is partnered with Italy’s Fiat SpA – has scored the biggest sales gains of any of the Detroit Big Three this year, the increase in demand lagging only key Japanese makers Toyota and Honda which have been recovering from last year’s serious inventory shortages caused by Japan’s March 2011 earthquake and tsunami.

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“We’ve changed the conversation at Chrysler Group,” said Sergio Marchionne, who serves as CEO of both Chrysler and Fiat, the Italian maker now holding a majority stake in its U.S. ally.

Chrysler’s July – September earnings shot to $381 million from $212 million a year ago.  Sales and other revenues rose to $15.5 billion from a year ago.

The other domestic makers have yet to report their third-quarter numbers though, by comparison, Honda today revealed it earned $1 billion worldwide for the latest quarter, up by 36%.

Chrysler has been gaining significant share this year, September sales surging by 12% as new models like the Dodge Dart have gained a following.  The maker has now had 30 consecutive months of sales gains, a significant turnaround after emerging from bankruptcy in mid-2009.

“We have revamped our product lineup with such segment-defining models as the Jeep Grand Cherokee and the Chrysler 300. Critics and consumers already are responding positively to the Dodge Dart and to the 2013 Ram 1500, with its best-in-class fuel economy,” noted Marchionne.

That’s particularly good news for its alliance partner Fiat which has been struggling to reverse a severe decline in its home market. Most European makers have suffered sharp sales and earnings declines due to the continent’s ongoing debt crisis – but that has been particularly severe in Southern European markets such as Italy, Fiat’s home.

The Italian maker is expected to fall significantly short of sales and revenue targets Marchionne set for it in 2009 and is considered all but certain to miss a 2014 goal of selling 6 million cars – combining volume with Chrysler.

A survey of analysts by the Bloomberg news service found their consensus is that the 2014 Fiat revenue target of 104 billion Euros, meanwhile, will likely have to be cut to 89 billion.

Marchionne is expected to address those concerns this week in a conference call.

The irony is that Chrysler – which was expected to be liquidated before Fiat agreed to serve as a white knight — now may have to keep its Italian partner afloat.

Nonetheless, it has problems of its own, including its heavy dependence on the North American market. Since tying up with Fiat, however, Chrysler has been pushing to gain ground in Europe – where some of its models are sold under Fiat brand names such as Lancia.

It also has confirmed plans to start building new Jeeps in China, the world’s largest motor vehicle market – though contrary to misquotes by Presidential contender Mitt Romney, that won’t involve transferring production from the U.S.  Vehicles to be produced in China will be specifically targeted at that booming market.

Chrysler also has to address quality issues. It slipped in the latest Consumer Reports Automotive Reliability Study, even as cross-town rival General Motors gained ground. ( Click Here  for more on that story.)

Chrysler has so far earned $1.29 billion for the first three quarters and is reaffirming a target of $1.5 billion for the full year.  It is standing by earlier forecasts that call for worldwide sales of  2.3 million to 2.4 million for all of 2012.

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