Struggling Back Into the Black Ford and Chrysler make some money for a change

Detroit finally had something to smile about. After 15 months of record- breaking losses that were included in last year's total of $7.5 billion for the U.S. auto industry, both Ford and Chrysler reported solid second-quarter earnings gains totaling $680 million. And the government of China put in an order to the U.S. Big Three for $130 million worth of utility trucks and minivans -- about what they sell during a full year in Japan.

^ Though Chrysler's hot-selling Viper muscle car ($50,000) and Grand Cherokee sports utility vehicle ($20,000) were on the market during part of the reporting period, these profits -- the first since the recession began in 1990 -- came less from new product than from continuing cost-cutting programs and reductions in rebates and discounted fleet sales. Even so, there were encouraging signs that both companies might extend their winning streak. Ford's conservatively restyled Taurus has come up a winner in the high-volume midsize-sedan market and is steadily gaining on Honda's Accord as the nation's best-selling car. Chrysler has nothing but new products to come, including its own line of sleek midsize LH sedans to be introduced this fall.

A single quarter, of course, does not guarantee a full year's comeback. Citing the U.S. economy's anemic 1.4% growth in gross domestic product, Ford's chairman, Harold Poling, warned that his company intended to stockpile its winnings against a traditionally weak third quarter and refused even to chip in a dividend boost for shareholders. General Motors is expected to remain in the losers' column when it reports its quarterly earnings this week, mainly because of huge write-offs from its troubled Hughes defense subsidiary. "We haven't had any real recovery yet," cautions Shearson Lehman analyst Joseph Phillippi. "The automakers are not doing badly, but they're still struggling." But for a change, the only red in Detroit's auto shops was to be found on its sporty new convertibles.