Jeremiah 29:11

Chrysler Considers More Cuts in Production


By BRADFORD WERNLE | AUTOMOTIVE NEWS

AutoWeek | Published 08/21/06, 8:21 am et

Chrysler may cut production of some 2007 vehicles if previously announced cutbacks don't make a sufficient dent in the company's bloated inventories.

In a July sales call to analysts, Chrysler CEO Tom LaSorda said the company was taking a series of actions to trim production by 50,000 to 65,000 units. Now COO Eric Ridenour says Chrysler could cut production further, primarily 2007 models.

Ridenour said Chrysler is sticking with the plan announced by LaSorda but will monitor the success of its sales programs closely.

"We have cuts coming throughout the third quarter," Ridenour said at the introduction of the redesigned 2007 Jeep Wrangler here. "Clearly our intent is to help correct the inventory. We have a pretty aggressive plan."

Ridenour said he thinks the actions Chrysler has taken are sufficient. If not, the company will make further cuts, he said.

"I'm not expecting there to be further cutbacks, but it depends on how good sales are," Ridenour said.

In July, Chrysler trimmed inventory with plant shutdowns.

As of Aug. 1, dealers were holding 560,200 vehicles, the highest July inventories in five years. That translated to a 93-day supply. Of the vehicles in inventory, 436,400 were trucks.

The Dodge Durango SUV tops the Chrysler group's days-supply list. Dealers had a 204-day supply as of Aug. 1, with 27,300 units of inventory.

Supplies of the Jeep Commander (127 days), Dodge Magnum (147 days) and Dodge Dakota (113 days) also were high.

Catherine Madden, production forecaster for Global Insight in Lexington, Mass., predicts Chrysler group production will decline 2.8 percent in the second half of 2006 compared with the first half.

"The pace of assembly in the first half of the year is unsustainable without ballooning inventories further," she says. "They need to move it (the inventories). They're launching several significant products over the next couple of months. Unfortunately, they are still under the gun of heavier incentives."

TechmanBD

I feel what is killing sales across the board, the big 3, is that the gas was getting high, and they were all still concentrating on the fullsize trucks and SUV's. They were fine when affordable, that includes gassing it up, but the average middleclass family sees they need to do something about cutting costs and that would be the first thing to go and find something a little more economical.

RLSH700

TechmanBD, I think your right about one of their problems is they are focusing too much on trucks. All but one of those vehicles are fuel thirsty vehicles. All three have done a poor job at appealing to one of the most popular segments, their offerings in the mid-sized market is disgraceful. They have this stupid idea to constantly use their large cars to compete with the Japanese mid-sized cars, it doesn't work. Most people who want a mid-sized car really don't want a large car. They want a mid-sized car and the Big Three have offered a rather unappealing mid-sized car market. Each screwed up in a different way.

Ford took the decent looking Taurus and replaced it with this ovally, catfish-looking Taurus, and they made their performance version more expensive and replaced the reliable engine with a slow, fuel guzzling, unreliable piece of junk. They replaced the dull looking Tempo with the ugly, granny mobile Contour.

GM wanted to use the W-body to compete with the Camry and Accord when it was the N-body that was closer to them. Both offerings felt small on the inside despite how big the car was on the outside (until the Impala). GM made the W-body the more appealing of the two but the fact is they could have done a better job if they would have improved the N-body cars. Both had bad interior. The only car out of the entire line-up that was able to compete with the Camry and Accord in reliability (at least in the eyes of outlets such as Consumer Reports) was the Buick Regal which couldn't compete with the Camry and Accord in fuel economy due to not having a I4 and due to the image that Buick has as an eldly persons car.

The Chrysler group's problem was that they wanted to use the LH cars to compete against the Camry and Accord instead of the cloud cars (Stratus/Cirrus/Breeze). The first cloud cars problem was that they were too small and didn't have a serious V6 offering. In some tests I have read about the 2.5L V6 was roughly as fast as the 2.4L I4 and neither were class leading in fuel economy either. Unlike their K-based predessors had done a good job in reliability (in the eyes of outlets like CR), the 2.0L and 2.4L offerings had a lot more head gasket problems than the 2.5L I4 had in the Spirit/Le Baron/Acclaim and the 2.5L V6 had its share of problems as well. Also the 3.0L was a more serious competitor at that time. In the post 2001 models, was far behind in fuel economy, power, and had new problems. The 2.7L had sludging problems which damaged their credibility and it still wasn't up to the refinement or power that the Camry or Accord had.

However, I think the biggest factor that hurts them is their perception in having reliability problems and their stubbornness in throwing out something that is junk. GM insists on holding on to their 60 degree V6 line-up which still has problems even though they made some newer updates to it. The 3.5L 12valve has had issues with the harmonic balancers. They also insist on using their outdated transmission line that has problems and use a transmission fuild which needs to be updated or replaced because it wares out faster than its competitors.

Ford let the headgasket problems with the 3.8L V6 go on too long. They should have just allowed the engine to keep its original iron heads that way they wouldn't have had the problems. They cost cutted the transmission in the Taurus so much to were the transmissions couldn't handle any of the engines that were hook up to them. My uncle is on his sixth transmission on his 3.0L Taurus.

Chrysler did a terrible job at informing their customers about the fact that their transmission needed the ATF+3/7176 series fluid instead of GM Dexron and they did a bad job at informing their customers that the transmissions require service at around 30,000 miles. Chrysler (from what I have read) outsourced the design of the head for the 2.0 and 2.4 and got a poor design and didn't fix it immediatel.