Chrysler turns first profit since bankruptcy

Chrysler has turned its first profit since leaving bankruptcy two years ago.

The company reported first-quarter net income of US$116 million and revenue of US$13.1 billion on Monday.

The profit is a milestone in Chrysler's long road back to health after its 2009 bankruptcy. It last reported a net profit in 2006.

Chrysler's return to profitability is also another chapter in the comeback of the Detroit Three automakers. General Motors Company, which also went into bankruptcy in 2009 and took government loans, has reported a string of profitable quarters and held an initial public offering in November.

Ford Motor Company, which did not take bailout money but nearly had to file for bankruptcy five years ago, reported its eighth consecutive quarterly profit last week.

Several trends put Detroit's automakers, and Chrysler in particular, back in the black.

rising Sales

Sales are rising as the economy improves, and each of the companies has released popular new products. Chrysler's sales rose 18 per cent worldwide in the first three months of the year.

"Chrysler Group's improved sales and financial performance in the first quarter show that our rejuvenated product line-up is gaining momentum in the marketplace and resonating with customers," Chrysler CEO Sergio Marchionne said in a statement.

Momentum is crucial. Chrysler wants to hold an initial public offering later this year or early next, but investors must first see a string of profitable quarters.

Chrysler's new vehicles caught buyers' eyes in the latest quarter. US sales of the revamped Jeep Grand Cherokee SUV jumped 64 per cent, while sales of the Chrysler 200 sedan more than quadrupled over those of its predecessor, the Sebring.

Chrysler said buyers were willing to pay more for its cars and trucks. Edmunds.com estimates the company lowered incentive spending by nearly US$1,000 per vehicle in the quarter. Revenues rose 35 per cent.

Chrysler last reported a profitable quarter a before it was sold by Daimler AG to private-equity firm Cerberus Capital Management.

Cerberus did not invest the cash needed to weather the worst auto sales decline in more than 25 years, and as a result, Chrysler came close to running out of money at the end of 2008.

- AP