Chrysler's shift in strategy accelerates

By Bernard Simon in Las Vegas
Financial Times
Updated: 5:11 a.m. CT Oct 11, 2007
Several non-US carmakers have approached Chrysler to possibly co-operate in the development of new vehicles, a senior Chrysler executive said on Wednesday night.

Steven Landry, head of the Detroit carmaker's North American sales, said these approaches, which remain at an early stage, have come since Cerberus Capital Management, the New York private-equity group, bought control of Chrysler in August from Germany's Daimler.

The proposals seek to marry the unnamed foreign carmakers' expertise in vehicle platforms with Chrysler's success in "top hats", or the more visible parts of a vehicle.

Chrysler's senior management, including Bob Nardelli, the former chief executive of Home Depot who moved to Detroit in August, are in Las Vegas this week to rally 3,000 Chrysler, Dodge and Jeep dealers as part of Cerberus's drive to reinvigorate the struggling carmaker.

Jim Press, vice-chairman and president, said Chrysler needed to become more focused on its customers by, among other things, adjusting its product lineup and improving relations with dealers.

Mr Press, who was hired from Toyota last month, said "we've got to look at the products through the eyes of the customers. It used to be that you had trade-offs. For the future, you've got to have customers satisfied."

For instance, he indicated that Chrysler is likely to pull back from its recent strategy of attempting to give the Jeep brand a softer, more urban image.

Several Jeep models that have taken this approach have sold poorly.

Recent moves to cull dealers and combine Chrysler, Jeep and Dodge brands under a single roof are likely to accelerate.

Several Chrysler executives, past and present, said Cerberus's arrival had markedly sped up decision-making at the carmaker. Mr Press cited a decision to reduce fourth-quarter production by 82,000 units which was taken on the basis of a seven-minute conference call.

He said Chrysler's distribution system was over-loaded with products that customers didn't want, while it couldn't turn out enough of the models that are in demand.

He predicted that macro-economic trends increasingly favoured US carmakers over their foreign rivals. He cited the weakening US dollar, escalating costs outside the US and ground-breaking labour contracts between the Detroit-based carmakers and the United Auto Workers union.

Chrysler and the UAW on Wednesday night reached a tentative deal on a new four-year labour contract, that includes transferring its retiree healthcare liabilities to an independent trust. Full details of the agreement have yet to be disclosed.

 

Finally! Someone in a position to do something effective has the understanding of how domestic economics affect the market here at home and can use that insight to U S Automakers' and buyers' advantage. I'm glad someone in Detroit didn't have to have their hand held and be lead to the painfully obvious!
Why buy imports when the dollar is worth less when we can keep our money here - where it's needed and worth more?!
This is the first "sound business principle" I've heard come out of Detriot in decades! AMEN!

 

Well I have but one word to say to that: DUH! [sm=bangbang.gif]

I believe some decisions concerning Jeep have been awfully embarrasing - first and foremost, take the Compass (please). That thing is a friggin disgrace to the Jeep name - not to mention it is frightfully ugly (I could use more colorful metaphors, but I think I've chosen my words very carefully). Come on... a front wheel drive Jeep? It's not even "Trail-Rated". It's supposed to be a Jeep, not a Chevy for God's sake. I know it's a warmed over Dodge Caliber, but it still comes across as one of the most irrelevant vehicles to come down the pike since the Pontiac Aztek.

The Patriot I suppose is passable, even though that's FWD too. At least that has some Jeep-heritage design that one can trace to the 1984-2001 Cherokee, but that God-awful Compass... I feel like taking an RPG to everyone I see on the road (which thankfully isn't that often).

Jeep is SUPPOSED to have a rough-and-tumble image, it's an image that the company has successfully crafted over several decades. I can appreciate any company wishing to expand their customer base, but when such endeavors manage to threaten or dilute their image in search of the almighty dollar, that's when I raise a red flag. The saying "winning the battle but losing the war" comes to mind in such a case.

 

Well, if Daimler messed it up, let's see if Cerberus can fix it.

 

Hmmm...Unnamed foreign car manufacturer. How come I get the feeling it is Chery or some other Chinese manufacturer?

Getting rid of the softer image for Jeep is the right move. Whoever came up with that whole idea wasn't thinking straight. People don't like Jeeps because they are a refined CUV company, they like them because of their tough, rugged image of offering world class off-road vehicles for a more reasonable price than their competitors (Land Rover, their ex-division spun from AM General Hummer, etc.).

The Patriot isn't a bad idea for a vehicle, it just doesn't fit Jeep at all. It would be the perfect vehicle for Eagle, but since Eagle is gone just like Plymouth do to being ignored, it would make a good vehicle for Dodge. The only thing that needs to be changed is they need to lose the CVT and use a normal automatic and offer a V6 to compete directly against models like the Escape and Vue. The Compass is a pointless model that needs to be dropped as it is just a station wagon and Jeep does not need station wagons.

Jeep does need a smaller SUV like the Patriot though, it just needs to be RWD/4WD to fit the Jeep criteria. The Liberty was too large to justify the I4 which is why it was not a popular engine choice in the first generation and why they did not carry it over to the new Liberty. If they would make a conventional automatic, RWD, V6 option, and increase the off-roading capability on the Patriot it would be a fine vehicle for Jeep.

Overall, it sounds like some good ideas. I'm not entirely sold on this cutting back on the number of dealerships. I can see only trouble coming from this.