DETROIT -- Ford Motor Co. and Chrysler Corp., the nation's No. 2 and No. 3 automakers respectively, reported yesterday strong second-quarter earnings that reflected a sales rebound driven by pent-up demand, low interest rates and incentives.
The earnings -- $775 million for Ford and $685 million for Chrysler -- were higher than most analysts expected. General Motors Corp., which will report on its performance today, also is expected to show a sizable profit.
The improvement comes after three years of financial difficulties for the Big Three -- and in spite of a slump in consumer confidence and sluggish economic growth overall.
"Autos are leading the way for the economy," said David McCammom, Ford treasurer and vice president.
The industry's turnaround could color the carmakers' on-going negotiations with the United Auto Workers union, which wants better wages, benefits and job security provisions in a new contract due this fall. Ford officials, however, said the earnings would not significantly affect the talks.
Ford's net income for the three months that ended June 30 -- the equivalent of $1.43 a share -- made for its best quarter in four years. The $775 million in earnings compares to $387 million, or 70 cents a share, in the same period last year.
Chrysler continued its comeback with second-quarter earnings of $685 million, or $1.86 a share, compared to profits of $178 million, or 54 cents a share, in the like 1992 period. The latest quarter included a one-time, $110 million gain for the sale of stock and assets.
Despite the upbeat report, investors apparently were disappointed with Chrysler's earnings, driving the stock down $2 a share to $42.625 on the New York Stock Exchange. Ford stock climbed 75 cents, to $52.
Ford attributed its 9.6 percent second-quarter sales gain to a gamut of phenomena: consumers' desire to replace aging vehicles, low interest rates, rising used-car prices that provided good trade-in values and attractive leasing packages. Sales of the Taurus mid-sized sedan, F-Series pick-up truck and Explorer sports utility vehicle were particularly strong.
The company doubled its earnings despite losses in Europe, where industry-wide sales are down 17 percent because of recessions in most of the largest countries. Ford lost $75 million in the second quarter in Europe, where it has laid off 13,000 workers to cut costs.
Some analysts have criticized Ford for a growing reliance on leasing, fearing that the firm's bottom line will be hurt in the future if vehicles depreciate more than expected.
"There is always a risk in leasing," said David Healy, auto analyst for S.G. Warburg. But he added that Ford appeared to be conservative in valuing leases on its books, minimizing any damage if used-car prices plunge.
For the year, Ford has earned $1.35 billion, or $2.45 a share, on sales of $56.18 billion. That compares to a loss of $6.27 billion, or $13.13 a share, on sales of $51.4 billion in the first six months of 1992. Last year's loss was largely due to an accounting charge for future retiree health benefits.
Chrysler is benefiting from brisk sales of its Dodge and Plymouth minivans, Jeep Cherokee and new LH-series sedans. Chairman Robert J. Eaton said while Chrysler is pleased with the market acceptance of its products, it is concerned about rising regulatory and health-care costs.
Chrysler took a $4.68 billion charge for retiree health benefits in the first quarter. For the first six month of the year, it lost $3.47 billion, or $10.38 a share, on sales of $21.93 billion, compared to income of $165 million, or 46 cents a share, on sales of $17.51 billion in the year-earlier period.