By on October 27, 2011

In the post-bailout, post-giveaway, billion-dollar-bonus-baby and occupied-Wall-Street era, it seems almost impossible to correlate reported financials to anything substantive. Nor does a single swallow make a summer.

Chrysler, however, is hoping that today’s third quarter report is merely the vanguard of a Capistranian return to profitability.

Quoth the press release,

  • Chrysler Group’s third quarter 2011 net income totaled $212 million compared with a net loss of $84 million a year ago
  • Third quarter net revenue was $13.1 billion, up 19 percent from a year ago
    Modified Operating Profit(b) grew to $483 million in the quarter, from $239 million a year ago
  • Chrysler Group ended the quarter with $9.5 billion in Cash(d) versus $10.2 billion at June 30, 2011
  • New four-year national labor agreement with the UAW ratified on October 26

Then there’s a quote from The Be-Sweatered Man himself talking about focus, Fiat, financials, and Funions. Or something like that. It just goes to show that if somebody gives you a car company for free and loans you the money to run it, almost anybody can make money, right?

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54 Comments on “Chrysler’s Making Bank...”


  • avatar
    Educator(of teachers)Dan

    Good for Chrysler.

    FWIW I do like the styling of the current and previous 300 but if they were to build the Imperial pictured again, with modern crumple zones and the Hemi and 8 speed auto they’ve got in the works, ect… I’d commit petty-larceny to put it in my driveway. Though checking eBay a nice original isn’t that expensive.

  • avatar
    philadlj

    That is one gorgeous Imperial Crown. Looking at the iQ in the post below this one, it’s like juxtaposing a Mastiff with a Chihuahua.

  • avatar
    Philosophil

    Excuse my ignorance, but could you please explain what “Capistranian” means? I honestly have no idea.

    Chrysler seems to be doing quite well up here in the great white north. I’m not sure exactly why that is, but their sales figures overall have been quite strong.

  • avatar
    Zackman

    Good for Chrysler. Now with all the nasty pre-whatever stuff out of the way, time will tell whether they’re for real, or just delaying the the final downfall. Ditto for GM.

    That Imperial sure is sweet. Build it again.

    • 0 avatar
      geeber

      I’d be more confident of Chrysler’s prospects if Fiat would give up the idea of badging new cars as Fiats and Alfa Romeos, and accept that the new vehicles would sell better as Dodges and Chryslers. And dump the idea of branding the pick-ups as “Rams.” They’re Dodges, plain and simple.

      • 0 avatar
        Zackman

        100% agree.

      • 0 avatar
        FreedMike

        I think that depends on how they introduce the Alfas and Fiats. If they do it slowly, and build a market for them, it might work assuming the cars are up to snuff. But if they just go whole hog from day one and stuff current Chrysler and Dodge dealerships with them, you’re right – that’s a fail.

        Alfa and Fiat left the U.S. market with their tails between their legs, and need to rebuild a following before they can be sold in any volume here. My guess is that this is the plan.

        Makes sense to me – and it would be nice to see a sporty European brand beside VW in the middle market. Maybe Peugeot, Renault and Citroen can do the same, assuming they’ve gotten their cars straightened out. The more, the merrier, I say.

      • 0 avatar
        Patrickj

        The Ram truck brand will probably go away if Dodge survives. I suspect it was just a means to permit the trucks and Jeep to be cleanly sold if Chrysler as a whole died off.

  • avatar
    Guzzi

    Much more likely they’ll make a super-high-end Town and Country and call that the Imperial.

  • avatar
    Its_Magic

    It just goes to show that if somebody gives you a car company for free and loans you the money to run it, almost anybody can make money, right?

    Indeed almost everybody. Victor Muller did not succeed.

  • avatar
    VanillaDude

    OK then, after Imperials and Swallows, we are onto the actual news posted…

    Profitability based on obsolete auto designs that are merely refreshed and renamed, is not a sign of economic long term health. There is absolutely no reason to believe that Fiat is interested in sinking billions into Chrysler in order to give it bold newly fresh car designs other than to demonstrate to potential buyers that the sow can indeed turn into a silk purse.

    Fiat needs to always consider any chance that may appear to get rid of this old fleet of stale cars when a potential buyer gives them a call. To do this, Fiat must keep Chrysler profitable in any way possible.

    If you look at what has been released by Fiat regarding brand replacement, you see an emphasis on milking, not feeding, Chrysler. The rebadged Fiats may excite some, but they are as easily rebadged as Fiats. It took GM about six months to get rid of every Opel rebadged as a Saturn. It will take no more time to do the same for Fiat.

    Until we see real billion dollar investments in new cars and see the success for these cars in the market, can one say there is real life left in the Pentastar.

    OK – back to Capistrano.

    • 0 avatar
      FreedMike

      I’m not so pessimistic…

      The new models they introduced (the Grand Cherokee and the Ram pickup) are doing well both with buyers AND critics, and the refreshes – particularly to the 200/300 and Avenger/Charger, and the Dodge Journey – have made those cars radically more competitive.

      Makes me think they can hold the fort until the truly new stuff comes along.

      Then again, there’s the Caliber…it sucks regardless, mainly because of the CVT. Put a proper transmission in the car, and it’d improve dramatically.

    • 0 avatar
      LeadHead

      Yeah, I forgot how it costs over $1 Billion (the amount Chrysler sunk into the 300/Charger alone) to just merely “refresh” a car. Durango/Cherokee are completely new vehicles. 300/Charger share so little with the previous generation, they might as well be completely new.

      A new small car is already scheduled to be unveiled sometime this year or early next, and the aging “merely refreshed” cars (200, Avenger, Journey, etc..) are already scheduled to be replaced. They will not be just “rebadges” either.

    • 0 avatar
      pgcooldad

      “Until we see real billion dollar investments in new cars and see the success for these cars in the market, can one say there is real life left in the Pentastar.”

      Ask and you shall receive:

      A $4.5 billion check from Mr. M.
      http://www.uaw.org/UAW-Chrysler-Hourly-Workers-Contract-Summary/index.html#?page=2

    • 0 avatar
      windswords

      Dude, the old 300/Charger were not obsolete vehicles. Now they are substantially improved. The Durango and Grand Cherokee are all new unless you think they were built with “planned obsolescence” in mind. The Pentastar is not an obsolete engine, and neither is the Hemi. And there will be a new 8 or 9 speed automatic from ZF soon. A new Dodge subcompact based off an Alfa is coming. And a new Viper. You need to expand your vision beyond the Caliber and Avenger/200.

    • 0 avatar
      John Horner

      People are far too focused on “all new” when it comes to the auto making business. Some of the best, and most profitable, vehicles ever made were on the market for a very long time.

      Ford, for example, is making a mistake ditching the aged Ranger. It could have continued making money and serving a need with a simple refresh.

      All new designs are over rated. Sometimes the All New is worse than what it replaced. Ref: Much of the current Honda/Acura line.

  • avatar
    phargophil

    I’ve always thought these Imperials were every bit as regal-looking as the Continentals of the time. But my favorite Imperial of all was the old Green Hornet’s Black Beauty.

    • 0 avatar
      scroggzilla

      Both cars were styled by the same man, Elwood Engel.

      • 0 avatar
        geeber

        I’d take the Continental. The original is still the best. The semi-wraparound windshield on the Imperial, left over from the 1957-63 models, makes it look dated, as do those rear-view mirrors designed in the late 1950s spaceship motif.

      • 0 avatar
        Roberto Esponja

        I’ll never understand all the hate towards the wraparound windshield. And please, don’t give me the old “knock your knees against the corners” story. I’m 6’3″, gotten in & out of plenty of fifties’ cars, and never smacked my knees against a corner of any windshield – I think you’d have to be seven feet tall to do that!

  • avatar
    Moparman426W

    I have a 63 Imperial Lebaron 4 door that my late uncle purchased new. I bought it from him in 1979 for 800 bucks. I like the tail lamps on the 62 better.
    I also own a 72, I used to have a 73, but I came across the 72 and I like the front clip better. I have a 78 New Yorker Brougham 2 door that also belonged to my late uncle, I have owned it since just before he passed away several years ago. I also want a 75 model, because it has the Imperial nameplate.
    I like the 64-66 like the one pictured here, but not as well as the other years, and I plain don’t like the looks of the 67-68 models.
    Chrysler was actually planning on building the Imperial again just a few years back, and came very close with the project, just before the fuel prices shot up to $4 a gallon. Google “imperial concept car” and you’ll see pics of what was very close to the planned car, it’s awesome looking. There were pics of it in motor trend at the time, I still have that issue.
    It was bad enough when they slapped the Imperial nameplate on the Dynasty, but someone on here suggested on a minivan? I almost spit my coffee out when I saw that.

  • avatar
    Moparman426W

    Geeber, while I think the 64-66 model looks ok it is definitely not my favorite, I do not like them enough that I would actually want to buy one, unless I ran across a clean one for a steal. While the windshield does look very similar to the earlier models it is a bit different and does not actually interchange. That windshield was the best looking out of detroit in 57 and eliminated the kneeknocker “dogleg” still present in ford and gm products for a few more years.

  • avatar
    Lorenzo

    Chrysler’s financials are still reported separately from Fiat, so can we still consider it a separate company, even with Sergio’s merger of management? Since a formal merger of Chrysler and Fiat SpA would require a stock offering to “monetarize” the UAW VEBA’s stake, what are the chances it becomes Chrysler-Fiat instead of the other way around? Smaller Chrysler once swallowed a much bigger maker (Dodge), could it happen again? Meanwhile, how much of Chrysler’s profits are financing Fiat?

  • avatar
    George B

    Jack, How is Chrysler/Fiat doing on being able to afford the next generation of product development? They had been eating the seed corn pre-bailout.

    I like the Chrysler Pentastar V6 and upgraded interiors. Wish the Challenger/Charger/300 would lose several hundred pounds instead of gaining weight with their update. Strongly recommend the Walter P. Chrysler museum in Auburn Hills for anyone visiting Detroit.
    http://wpchryslermuseum.org/homepage.do;jsessionid=828EA04D18AD2A6545E821358CD9C424

  • avatar
    Loser

    “Nor does a single swallow make a summer”

    True but it can make your day.

    I’m very glad to see them doing well, just hope they can keep it up. We have all seen this before with Chrysler, just hope it’s for real this time. I still have some reliability concerns with Chrysler but even so I’d buy a new V8 Charger if gas prices were stable.

  • avatar
    dave-the-rave

    My dad had a ’64 Newport (maroon) with the auto transmission buttons in the dash. My sister drove it into an accident before I could ever drive it. (Ended up learning on a repainted ’65 Buick Special.)

  • avatar
    Feds

    O.k., now I’m no rocket-economist, but something is fishy here:

    Third quarter net revenue was $13.1 billion, up 19 percent from a year ago

    Modified Operating Profit(b) grew to $483 million in the quarter, from $239 million a year ago

    Chrysler Group ended the quarter with $9.5 billion in Cash(d) versus $10.2 billion at June 30, 2011

    So year over year, you have $700,000,000 fewer dollars (or the amount of money you would need if you wanted to spend $23,388 every day of your life from the time you were born until the day you died… if you were going to live to be exactly 84) and this is MAKING bank? Perhaps I do not understand the meaning of the word “bank”.

    • 0 avatar
      Patrickj

      Actually, it was three months they chewed through the $700 million in.

      • 0 avatar
        Feds

        I saw that after I posted, which only makes me more confused…

        Start July 1 with $10,200,000,000 in the bank, do business, profit $483,000,000 and have $9,500,000,000 in the bank on October 1.

        Does “modified” operating profit mean “loss”?

    • 0 avatar
      Pch101

      Modified Operating Profit(b) grew to $483 million in the quarter, from $239 million a year ago

      According to the press release, “Modified Operating Profit” is basically EBIT, excluding pension obligations and the costs associated with the reorganization.

      What this tells you is that they took in more money selling cars than they spent selling cars. That’s a positive.

      Perhaps I do not understand the meaning of the word “bank”.

      What you don’t understand is that cash is a balance sheet item, while profit is on the income statement. It is possible to earn income and deplete cash simultaneously.

      Think of a household. It is possible to have a job and to earn money, yet for one’s savings account balance to shrink at the same time. Businesses are no different in that respect.

      Without more data, it is hard to judge the overall picture of the company. But from this, we can safely surmise that their auto operations bring in more money than they cost. That doesn’t necessarily mean that everything else is fine, but the operating profit is still a useful metric.

      • 0 avatar
        Feds

        I’m really just playing dumb above, as I’m trying to point out some of the issues with the balance sheet number. Specifically, that they can easily hide real issues. I want to use the word obfuscate in this paragraph, so I will.

        Short and sweet: if you’re profitable, your cash on hand should be rising. That’s a slight oversimplification, especially in the auto industry, as there are big cyclical investments (new models) that are paid back over time.

        However the simplification holds true in the long run: if I have 10k in the bank, and next month I have 9k, I can’t keep it up forever, no matter how “profitable” my month was.

      • 0 avatar
        Pch101

        Short and sweet: if you’re profitable, your cash on hand should be rising.

        As I just pointed out, that isn’t necessarily true.

        That’s a slight oversimplification, especially in the auto industry

        It’s a broad oversimplification. The cash could be used to purchase assets and/or pay liabilities.

        More information is required. However, I would agree that it is wise to watch the balance of the cash account.

  • avatar
    Jerry Sutherland

    That has to be good news because here in Canada the top banner ad on the TTAC site is Chrysler-now we know the check will clear.

  • avatar
    John Horner

    “It just goes to show that if somebody gives you a car company for free and loans you the money to run it, almost anybody can make money, right?”

    Actually, the vast majority of people would still not make it work, even with those initial conditions.

  • avatar
    ciddyguy

    That does sound like potentially good news for Chrysler. The thing to remember is that Chrysler fell so far (but I don’t think in some ways, not as far as GM has in recent years) and that they are working from a much smaller stack of bills available for reworking their models and what they are doing now is improving what they have with the idea of creating cash to enable them to be able to redo/replace these current models with new designs.

    I have to agree, they need to reduce the weight of some of these models, especially the Challenger/Charger and the 300. the Avenger/200 are merely refreshes of the previous car but improved enough to make them sell better – for now.

    Give them time and I think we’ll see them do well over the long haul, Fiat and Chrysler seem to be working together to ensure that this is the case.

    That said, I’ve still got my doubts on GM’s ability to overcome their corporate culture and if that continues to be an issue, they may fall further down the ladder and if that happens, we just might see it this way, Ford, then Chrysler (assuming Chrysler does well) and then GM. But a lot has to happen before that happens and it’s much too early to tell what’s going to be in a few years.

  • avatar
    obruni

    oh, silly amateur investors.

    profit is nice, but cash is king.

    a look at its 8k shows Chrysler claiming $481 million in new investments, which hurt its cash position. given the nature of the business, this figure is not unusual.

    however, I would really like to know how $213 million in Net Income turns into a negative $171 million in operating cash flow. I guess we have to wait for the 10Q filing in 2 weeks.

  • avatar
    Moparman426W

    Beefmalone, to get an idea of how tough the Imperial was built here is a nice article, it starts on page 3.
    http://www.imperialclub.com/Articles/EBerg/index.htm

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