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Analyst says Chrysler made money in March, but great challenges

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Analyst says Chrysler made money in March, but great challenges remain



A European auto analyst forecasts that Chrysler came close to breaking even in the first quarter of 2010, but faces major changes if it is to survive in the longer term as a smaller player in the U.S. market.

Max Warburton praised CEO Sergio Marchionne’s cost-cutting ways, but warned that Chrysler will continue to shrink because it can’t bring new products to market fast enough to take sales away from competitors.

“We remain unconvinced Chrysler will survive in its current form despite Marchionne's blood, sweat and tears,” Warburton said.

Marchionne is expected to provide the first audited report of Chrysler’s financial condition since 2007 next Wednesday. The report, which is expected to cover the period from June 10, 2009, when Chrysler emerged from Chapter 11 bankruptcy to the end of last year. It will be part of a broader five-year plan presentation for Fiat’s automotive business, which owns 20% of Chrysler.

Marchionne has repeatedly said Chrysler will break even for 2010 if it sells 1.1 million vehicles in the U.S. and 1.65 million worldwide.

But it has been the only major U.S. automaker to not increase sales in the first quarter from a year earlier. Chrysler’s U.S. sales fell 5% in the first quarter and its market share slipped from 11.2% a year earlier to 9.2%.

Unless that decline is stabilized and reversed, Warburton said, it may not be feasible to sustain the Chrysler and Dodge car brands.

“A slimming-down of Chrysler to be just Ram, Jeep and a U.S. production base for Fiat looks a realistic exit strategy to us,” he wrote in the report.

A Chrysler spokesman did not respond to a reporter’s request for a comment.



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