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[quote]Chrysler faces a tough task
By Christopher Boyce
ST. LOUIS POST-DISPATCH
02/24/2008
Chrysler
Ron Warhoover, of Ofallon IL, and Jaydon Dailey, 5, look at the new high performance model of the 2008 Dodge Charger at Oliver C. Joseph Chrysler Dodge in Belleville. Warhoover , along with Dailey, and his wife Alana Warhoover, were looking for a new Dodge Ram truck.
(Emily Rasinski /P-D)

Chrysler LLC's five-year plan to reduce the company's size may be what's best for a struggling automaker in a tumultuous economy.

Although Chrysler may be doing the right thing, analysts say it will face a pair of simultaneous significant challenges — consolidating a fragmented dealership chain and replacing venerable product lines with fresh, exciting vehicles.

Some analysts say that they would be surprised if, in five years, Chrysler still is owned by Cerberus Capital Management LP and that the plan's real goal may be to get the automaker ready for sale.

Chrysler met with dealers in eight cities in early February to introduce "Project Genesis," a plan aimed at "right-sizing" the automaker given its shrinking market share.


Chrysler's share of U.S. light-vehicle sales slipped to about 13 percent of total sales last year from about 15 percent of total sales in 2000, according to market research firm Global Insight Inc. in Lexington, Mass.

To cope with shrinking sales, dealers are being asked to merge voluntarily dealerships that don't sell all three of Chrysler's brands — Chrysler, Dodge and Jeep — into single locations that do.

Consolidating will make things easier on dealers, Chrysler said, because the automaker also plans to eliminate several models, making it difficult for those that don't sell all three brands.

This is unsettling for Brad Joseph, general manager of Oliver C. Joseph Inc., a Dodge and Chrysler dealer in Belleville.

Joseph spent $6.5 million to move his third-generation, family-run dealership into a new facility in 2006. He spared no expense in investing in the dealership's future, even installing a fireplace in the showroom and attaching to it a restored 1927 railroad passenger car for use as a conference room.

Although his dealership carries only two of Chrysler's three lines, Joseph said he was not searching to buy a Jeep franchise. But he said he wouldn't mind adding a Jeep franchise for the right price.

The consolidation push could mean a shakeup for the St. Louis area. In December, Chrysler told the Post-Dispatch it had 57 dealerships in eastern Missouri and Southern Illinois, 33 of which carried all three brands. Although there have been several consolidations since then, Chrysler declined to provide an updated count for its local dealerships.

Dealers that need to acquire or sell will face a tough decision, said Vince Capatosta, president of All-Star Dodge Chrysler Jeep in Bridgeton. Aside from the difficulties associated with franchise sales and acquisitions, Capatosta said many dealers who should sell weren't yet ready to let go.

"When you have your lifeblood in one of these places, it's extremely difficult to turn the key and say, 'OK, I'm done,'" he said. "The economic reality is at some point a guy has to realize he is not going to make it selling one brand."

Joseph says he is happy with the current state of the company and its newest products. Chrysler debuted three new or redesigned products in the last few months to mostly positive reviews — the Dodge Ram pickup, the Dodge Journey crossover and a Dodge Challenger sport coupe.

FUTURE LINEUP

Still, Joseph is concerned about the company's future product lineup. Joseph says he usually has concept photos or at least descriptions of new vehicles two years before the models reach his showroom.

After meeting with Chrysler executives this month in San Francisco at th