ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, October 17, 1996 TAG: 9610170024
SECTION: BUSINESS PAGE: C-8 EDITION: METRO
DATELINE: DETROIT
SOURCE: Associated Press
The Big Three automakers rolled through an unusually profitable summer, setting a third-quarter earnings record of $2.63 billion.
Ford Motor Co., General Motors Corp. and Chrysler Corp. nearly doubled their net earnings from the same period of 1995, when they earned $1.35 billion. The previous record was $2.33 billion in 1994.
Ford finance chief David N. McCammon said Wednesday that the industry outlook remains optimistic.
``The economy is moderately growing with relatively low inflation,'' he said. ``At this point, I think it's fair to characterize the U.S. economy as `the Goldilocks economy' - not too hot, not too cold, just right.''
Ford said Wednesday strong performances by its U.S. operations and financial services group contributed to a $686 million profit in the July-September period.
GM said Tuesday that it earned $1.27 billion, while Chrysler posted a $680 million profit.
The manufacturers' strong performance was echoed by dealers in Southwest Virginia.
"It's been a very good year," said Bill Kovacs, president of Midpoint Chevrolet in Rocky Mount. "There's an awful lot of people out shopping for cars."
Midpoint has added more people to its service and sales departments, and, during the third quarter, extended its sales hours. "We even cut back on advertising because the traffic was so strong, it got to the point we couldn't handle it all," he said.
The Big Three's quarterly total exceeded analysts' estimates. It was good, but not as impressive as the numbers suggest, said David Healy, analyst with Burnham Securities Inc. GM's profits were boosted by an unusually low tax rate and $253 million it saved by deciding to keep a Delaware assembly plant open.
But the continuing U.S. economic growth led to healthy demand for cars and highly profitable pickups, sport-utility vehicles and minivans.
Doug West, general manager of Vinton Motor Co., a Ford dealership, said customers have been flocking to Ford's newest introduction, the Expedition sport-utility vehicle.
"Ford has gone a long way toward customer satisfaction," he said. "People have a lot of confidence in Ford products."
Ford reported its U.S. automotive operations earned a third-quarter record of $634 million, up 42 percent from $447 million a year ago. Outside the United States, Ford recorded a $619 million loss on automotive operations, compared with a $388 million loss a year ago.
The improvement came despite sharp losses in South America and Europe.
Ford lost $226 million in South America, compared with a loss of $102 million a year ago. Much of that loss was blamed on new vehicle launch expenses in Brazil.
Ford's European operations lost $472 million, compared with a $320 million loss in the year-ago period, in part because of the costs of launching new models.
McCammon said continued cost-cutting and new products, notably the subcompact Ka and a redesigned Mondeo sedan, should lead to a substantial improvement there in the fourth quarter.
Ford Chairman Alex Trotman said automotive results for the fourth quarter should be stronger than last year, despite an anticipated $300 million to $400 million charge for early retirements. ``There's still much to do. We've made solid progress, and we're becoming a leaner, faster company,'' he said.
Staff writer Megan Schnabel contributed to this report.
LENGTH: Medium: 75 lines ILLUSTRATION: PHOTO: 1. NHAT MEYER/Staff Linda Sloan (above) is shown aby CNBsport-utility vehicle Wednesday by Vinton Motors salesman Dale
Proctor. 2. AP. The F-150 pickup truck and Taurus GL (right) helped
Ford double its third-quarter earnings. color. Graphic: Chart by
staff: Big Three Auto Earnings. color. KEYWORDS: MGR