Chrysler -- valiantly fighting for life -- may surprise skeptical experts

Will Chrysler corporation make the grade? Barring an unforeseen catastrophe, the answer is probably yes -- at least for the short run. Eventually, however, the long-harried carmaker could be caught in the wringer once again because ofthe unforgiving pressures of the marketplace , especially the upcoming new cars from General Motors, which Chrysler cannot hope to match.

One stock market analyst wryly predicts: "My feeling is that GM is going to eat Chrysler for lunch in the long run."

In contrast, Arvid Jouppi, a market analyst with John Muir & Co. of Detroit, asserts flatly, "I have less question about Chrysler's recovery now than I've ever had."

The answer may lie somewhere in between.

Chrysler has cut its break-even point, Mr. Jouppi points out, and its cars are selling well in a poor market. While its break-even figure has been bruited at 1.2 million cars, Jouppi adds, "I think it is less than 1 million." That, together with the fact that the company has got rid of a large chunk of its real estate, sharply cut its work force, and slashed costs gives it a good shot at remaining a viable part of the US automotive scene.

No matter what happens a few years down the road, the shrunken US automaker is making a valiant, and apparently successful, effort to stay in the car business, albeit with $1.2 billion in federal-government loan guarantees over the last year providing the money to do the job.

Chrysler, in fact, has surprised some of its strongest doubters. A few months ago many people didn't expect the struggling firm to make it through the winter because of poor sales and the delay in getting its last infusion of government-backed money --$300 million. Yet the company, a shadow of its former self, is still selling cars.

"Chrysler, in effect, has already gone through what amounts to two bankruptcy reorganizations," reports David Healy, an analyst with Drexel, Burnham, Lambert Inc. of New York.

"It has restructured its debt and cut the interest charges," he notes. Agreeing that Chrysler may find itself in hot water again, Mr. Healy says, "It may not be a Chapter 11 filing, but it could be a breakup of some sort --example."

Right now Chrysler is hardly an attractive merger partner to anyone, although it admittedly has held talks with West Germany's Volkswagerwerk AG, PSA Peugeot-Citroen of France, and maybe others as well. Indeed, Chrysler will not be attractive as a merger partner unless it again becomes profitable in the ar business.

"I don't expect any merger opportunity for Chrysler until it has had six to nine months of profitable operation," is the way Jouppi sees it. "At that point , however, it could well decide that it doesn't have to merge to survive." If there is no improvement, or long-delayed improvement, in its profitability, then many people expect that any potential partner might want to wait for what one observer calls "a fire sale."

So far the corporation's K-cars -- Dodge Aries and Plymouth Reliant -- are off on a clear track. Sales are good in a depressed market.

Chrysler still plans to come out with a luxury version of its K-car compact next fall. It is designed to compete head-on with GM's X-cars, the Chevrolet Citation, Buick Skylark, et al. It also will soon field a sporty, front-wheel-drive mini-pickup truck to compete with the Japanese mini-models and new small-size trucks by Ford and GM.

In its drive to be noticed, Chrysler hopes to introduce a K-derived convertible in early 1982. If it does, it will be the first large-scale US car producer to build a soft-top car since GM quit the convertible market in the mid-1970s.

Chrysler will drop its rear-drive LeBaron/Diplomat cars in favor of front-wheel drive in 1982. Further, it is planning a smaller version of its new 2.2-liter engine, which went into production in the 1981-model year. The new engines will be 1.8 liters and reach the road in 1982.

A sporty version of the K-car, dubbed the K-24, and a four-passenger hatchback will face the competition in 1983. Chrysler also will drop some of its large-size cars -- the Newport and Gran Fury, for example -- and shrink and update others, such as the Cordoba.

The rebate programs have done a big job for the domestic carmakers. They drew a lot of motorists into the showrooms, and many of them kicked a few tires and then bought the cars.Chrysler's share of the domestic-car market has been running at 11 to 12 percent since the rebates began a few weeks ago.

"The average car buyer is watching the commercials and not the news," one observer wryly asserts.

In 1980, Chrysler's overall share of the domestic car market was 10 percent.

The question now is how Chrysler will do in the spring market when it will not have the stimulus of the rebate programs and, at the same time, will have to face new models from both GM and Ford.

If its 3,800 dealers keep up momentum through aggressive salesmanship, they may be able to keep the wheels turning for themselves and the corporation.