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Chrysler Charging Toward Profitability?

When a company has just come through bankruptcy (and some legitimate debate about whether it should stay in business) and it's not even back in the black, it may sound ludicrous to say it's charging to profitability.

OK, so using the word "charging" is probably an overstatement.

But make no mistake, Chrysler's third quarter earnings show the beleaguered auto maker is making major progress towards getting back in the black.

3rd quarter financials:

  • Operating profit: $239 Million
  • Net Profit: negative $84 Million

Revised 2010 Guidance:

  • Operating Profit: $700 Million (up from $0-$200 Million)
  • Cash Flow: $500 Million (up from negative $1 Billion)
Chrysler grille
AP
Chrysler grille

So why are things improving for Chrysler: Well, the rebound in auto sales is a big part of the company doing better.

So is the company's new Jeep Grand Cherokee.

New product always brings buyers into showrooms, and the Grand Cherokee is a huge improvement over the previous model.

Unfortunately for Chrysler, it's still shackled with a line-up of old models that need major incentives to be sold. That's a double edged sword. Yes, it's a drag on current sales, but it shows a wealth of opportunity for CEO Sergio Marchionne. There is a wave of new products heading to Chrysler, Dodge, Jeep and Ram showrooms.

It's what this company desperately needs.

Sergio Marchionne is not your typical CEO, and not just because he prefers to wear sweaters instead of a shirt and tie. Marchionne follows the mantra of walking quietly, carrying a big stick, and delivering results. There's little room for PR, interviews, or worrying about promising investors things will get better. As one person who has worked with Marchionne (first at Fiat and now at Chrysler) told me, "Sergio could care less if you think he's a good guy. His only concern is making money."

Thanks to Marchionne's turnaround plan, Chrysler is no longer a black hole. It's no longer in the ICU. And you can see the company's road to profitability as it rolls out more new or refreshed models like the Grand Cherokee.

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