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Chrysler had its best quarterly profit in 13 years. Not bad for a company that almost died three years ago.
The company earned $473 million in the first quarter, mainly on the back of strong U.S. sales, which rose 39 percent from January through March. Customers snapped up Ram pickups, Jeep Grand Cherokee SUVs and Chrysler 200 sedans.
The profit was more than four times what Chrysler made a year earlier. And it was the best performance since the third quarter of 1998 when Chrysler earned $682 million during the pickup truck and SUV boom.
Another reason Chrysler made so much money is because it's generating more cash every time it sells a car or truck. It's getting an average of $29,234 per vehicle in the U.S., up almost 5 percent over last year, according to the TrueCar.com auto pricing website. When sales and prices both rise, that generates more revenue and profit. Revenue for the quarter rose 25 percent to $16.4 billion.
It's a big change from 2009. The recession, which devastated auto sales, brought the company to the brink of financial ruin. Chrysler and its financing arm needed $12.5 billion from U.S. taxpayers to survive. When a government auto task force deadlocked on whether to save the collapsing company, the tie was broken by President Barack Obama.
Then things turned around. The company cut costs and the economy improved. And Chrysler worked overtime to revamp 16 of its models in an effort to make them more appealing to consumers. The results have paid off with steady sales increases through 2011 and into 2012.
The company is optimistic about this year, repeating a forecast that it would make $1.5 billion in 2012.
It has reason to be cheerful. Total car and truck sales in the U.S. are running at an annual rate of 14 million so far this year. That would be a healthy increase over last year's 12.8 million. The average age of vehicles on U.S. roads is nearing 11 years, and pent-up demand is helping sales. Chrysler should share in the growth. Last year it raised its U.S. market share to 11.5 percent, from 9.4 percent a year earlier.
Chrysler also is about to launch the new Dodge Dart, its first decent compact car since the bug-eyed Neon in the mid-1990s, and a refreshed version of the Ram pickup, its top-selling vehicle, is coming later in the year.
The company, which is privately held and majority owned by Italian automaker Fiat SpA, still faces risks. The company primarily does business in North America, so its fate is tied to the U.S. economy. Chrysler sold 523,000 vehicles globally during the quarter, but only 67,000 were outside North America. Still, international sales were up 80 percent, the company said.
Chrysler also said it added $1.7 billion to its cash reserves during the first quarter. It now has $11.3 billion in cash.
Also Thursday, the company said it will not renew its auto financing agreement with Ally Financial Inc. when it expires on April 30, 2013.
Ally loans money to Chrysler customers to buy cars, and it loans money to dealers to finance their inventories. The U.S. government owns 74 percent of Ally, which it got in exchange for a $17.2 billion bailout in 2009. Ally eventually hopes to sell stock to the public to repay the debt.
Chrysler says it's negotiating with Ally and other banks for financing options.
Of the original Chrysler bailout, $11.2 billion has been repaid. The U.S. Treasury Department says it won't recover the remaining $1.3 billion.