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. Last Updated: 07/27/2016

American Automakers Report Record Profits

DETROIT -- The big three U.S. automakers are expected to report all-time record quarterly profits and industry analysts say their fortunes could grow even brighter as the year continues.

Chrysler Corp., Ford Motor Co. and General Motors Corp. earned more than $4.5 billion in the second quarter, analysts estimate. That sum is nearly double their year-ago earnings and about $1 billion higher than their previous record profits, in the second quarter of 1988.

"The potential to double these numbers again is there," said J.P. Morgan analyst David Bradley, adding that automakers are only halfway toward reaching their peak in the current business cycle.

Auto profits will shift into overdrive as replacement demand continues to increase, vehicle prices rise and automakers roll out new, higher-margin vehicles, analysts say.

GM's and Ford's strength comes despite weak performances in Europe, where slow sales are not expected to recover significantly until next year.

In recent months, Big Three sales have been held back by shortages of popular models, particularly sport/utility vehicles and other light trucks.

As a result, factories will continue to work overtime to replenish dealer stocks that were 400,000 units lower than normal in June, said Dean Witter analyst Ronald Glantz.

"The industry can't produce enough vehicles to meet demand," said Glantz. "That means it's going to have to rebuild inventories in the second half and the first quarter of next year."

Chrysler is expected to report Thursday that it earned about $950 million, or $2.26 a share, up from $685 million last year.

For Ford, analysts expect second-quarter profits of about $1.66 billion, or $1.40 a share, up from $775 million a year earlier. The automaker is expected to report earnings on July 27.

GM's profit will be near $1.9 billion.