FORTUNE — Chrysler is being lavishly praised for its string of Super Bowl ads starring Eminem and Clint Eastwood. A slew of impressive new models like the Dodge Dart, are winning the Auburn Hills, Michigan-based automaker hard-fought second looks. As the U.S. economy gains steam, things should be smooth sailing for Chrysler from here on out, right? Not exactly.

Chrysler’s latest financial performance, while vastly improved from the days following the 2009 bankruptcy, hasn’t yet reached the level needed to renew its model line and to expand into major growth markets like China, where it has no presence. “Financially speaking Chrysler is doing better,” says Joe Phillippi, an analyst for Auto Trend Consulting of Short Hills, New Jersey. “But the auto industry is very expensive and very capital-intensive. It costs billions to develop new models.”

In 2011, Chrysler earned $183 million in net income, a big swing from the $652 million loss in 2010 and the first time an independent Chrysler posted a positive net income since 1997. This year Chrysler forecasts net income of $1.5 billion — which would be a stunning affirmation of the company’s longer-term viability. The automaker was acquired by Daimler in 1998, which sold it to Cerberus in 2007. Fiat SpA was given a 20% ownership stake in 2009 and now owns 58.5%, after complying with stipulations of the U.S. government. In July of last year Chrysler repaid the U.S. Treasury in full, repurchasing its 6% interest in the company; the automaker also repurchased its 1.5% interest from the Canadian government.

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That complex set of financial contortions over with, Chrysler must now earn several times what it posted in 2011 to pay for the design and development of future vehicles. That could cost as much as $1 billion after investing in new plants, tools and training. Theoretically, profit could improve along with increases in unit-sales, as well as pricing gains. The company’s five-year plan, announced in 2009, envisions financial stability and more efficient use of Fiat and Chrysler platforms. So far the company says it’s on track.

To ease the massive cost for new vehicles, automakers increasingly are joining forces so they can share models, parts and technology. Sergio Marchionne, chief executive of Fiat and Chrysler, has said any modern automaker must be able to sell at least 6 million vehicles annually to be financially viable – Fiat and Chrysler are selling just over 4 million vehicles together.

A new Dodge Dart, based on a Fiat-owned Alfa Romeo chassis and architecture, is scheduled to appear in the U.S. in the second quarter of this year. Likewise, Fiat’s Maserati brand will build a sport-utility vehicle at Chrysler’s Jeep plant in Detroit – a second example of sharing parts, components and assembly line capacity to keep costs as low as possible. Marchionne, who has a goal of increasing combined sales to 6 million by 2014, has hinted that he is looking for a third auto company to add to Fiat-Chrysler. He may need that partner, he said in January, before 2013 when he hopes to launch an initial public offering of Chrysler stock.

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He suddenly has a new headache, though: the rapidly deteriorating European economy, which has depressed sales of Fiat and other Continental automakers. On Monday, Standard & Poor’s put Fiat debt securities on Creditwatch with negative implications due to plant overcapacity in Europe and weakening sales due to the continent’s debt crisis. In the days leading to Chrysler’s bankruptcy Fiat was seen as the savior — now the situation may be reversed. If Chrysler is to pull its own weight, never mind Fiat’s, the enterprise has to make more money as quickly as possible.