Despite high incentive costs, Ford Motor Co. lifted the Big 3 to a combined profit of $4.35 billion in the first quarter, up 3.8 percent from a year earlier.
Ford net rose 15.1 percent from a year earlier to $1.69 billion, a first-quarter record that beat a mark set in 1989.
Chrysler Corp. also had a record first quarter, at just over $1 billion. That topped the year-ago record by 2.2 percent.
General Motors slumped 5 percent from a year earlier, to about $1.6 billion.
Ford outearned GM on 12 percent less revenue than GM's $41.6 billion, and on flat worldwide unit sales. In the simplest terms, that means Ford is cutting costs and enriching its model mix faster than it is increasing incentives, said John Devine, chief financial officer.
The Ford result did not include a one-time gain of almost $16 billion - which existed only on paper - from the spinoff of The Associates. The spinoff became effective March 12. Ford did not actually get any gain out of the transaction, but it distributed $26.8 billion to shareholders.
CHRYSLER STAR: DURANGO
Devine savored reporting what looked like a quarterly profit of $17.6 billion, even if it was only for accounting purposes.
'That number doesn't mean a lot, but I just like the chance to report that, once in my career,' he said, at Ford's earnings press conference on April 16.
Chrysler Corp. attributed its record quarter to the new Dodge Durango sport-utility, which reached full production in the first quarter.
Jim Donlon III, Chrysler Corp. controller, said on April 9 that the Durango was 'the single most important product' in the record quarter.
Like its competitors, Chrysler has been trying to keep price increases to a minimum, in some cases while adding content.
'We have reduced costs by $300 million, and we are using that to make our vehicles more competitive,' Donlon said.
GM has a cost-cutting target of $4 billion for 1998, said Chairman Jack Smith. Most of that - $3 billion - is to come from North American Operations.
NAO earned a record $826 million for the quarter, up 8.2 percent from the previous record set a year ago, GM said. However, international profits fell 39 percent from last year as major markets in Asia and Latin America slumped.
JUST A STEP AHEAD
Big 3 executives voiced optimism about their ability to continue to cut costs faster than incentives rise.
'The market is not going to let you take too much (in price increases), so you've got to keep going on cost reduction,' said Mike Losh, GM's chief financial officer.
Devine repeated Ford's forecast for around 15 million to 15.5 million sales this year, including 300,000 medium and heavy trucks.
'This is the fifth year of very strong industry volume in the U.S.,' he said. 'A downturn probably will happen sometime, but we do not see it on our horizon, as far out as we can possibly look.'
Staff Reporter Ralph Kisiel in Detroit contributed to this report