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Dinged-up Chrysler sputtering like a beater

Old 01-09-2010, 10:32 AM
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Default Dinged-up Chrysler sputtering like a beater

Since Fiat owns Ferrari and Masserati you would think they could contribute some technology to the Challenger and Viper cars. It will be interesting to see how Chrysler does in 2010.

Dinged-up Chrysler sputtering like a beater

Company must live with dented lineup until Fiat cars arrive

By Robert Channick
Special to the Tribune
January 10, 2010

How bad a year was it for Chrysler Group LLC in 2009?

At Napleton's Northwestern Chrysler Jeep Dodge in Chicago, they didn't sell a new Chrysler during the entire last two months of the year.

Everything for the beleaguered company and its dealers is now riding on Fiat, Chrysler Group's new Italian owner, which plans to remake the company's aging product line. But that will take several years to fully implement.

Meanwhile, the company keeps getting passed by more nimble competitors, raising the question of whether Fiat really knew what it was getting into when it rescued the smallest of Detroit's automakers from the brink of liquidation.

"Chrysler is in a situation where they have to really stick it out with uncompetitive products for a couple of years until this Fiat-based stuff comes on line," said Ed Kim, an analyst at AutoPacific in Tustin, Calif. "It's definitely a very precarious time for Chrysler."

While last year was tumultuous for the Big Three, Chrysler took more than its share of lumps. Forced into bankruptcy in April, the ailing automaker shuttered 789 dealerships, a fourth of its showrooms. Emerging in June under the control of Fiat, its third owner since 2007, Chrysler continued to sputter, falling below a million units and dropping to fifth in U.S. vehicle sales behind Honda.

For the year, Chrysler Group was down nearly 36 percent, compared with a 21 percent industrywide decline. While overall U.S. sales of 10.4 million units were the lowest since 1970, makers of fuel-efficient small cars like Hyundai, Subaru and Kia all showed gains. Chrysler has no small cars in its lineup, something Fiat management plans to rectify in a big way.

With the exception of trucks, minivans and the Jeep Wrangler, nearly every other car in the Chrysler lineup will be based on a Fiat platform by 2014, including new compact offerings, with a projected 25 percent improvement in fuel economy across the fleet, according to officials.

While the subcompact Fiat 500, a retro hatchback in the mold of the Mini Cooper, will make its way into showrooms this year, it is seen as a niche offering that is unlikely to generate mass sales. The synergy is unlikely to gain traction until 2012, when the first of the new generation Chrysler-branded/Fiat-based cars are expected to arrive. The company's five-year plan does not include any hybrid or electric cars.

In the meantime, Chrysler is rolling out nine redesigned models this year that were in the pipeline before the bankruptcy, including Jeep Grand Cherokee, Dodge Charger and Chrysler 300.

"They're large V-6 and V-8 products, the exact sort of products that are kind of falling out of vogue right now," Kim said.

Hoping to get a jump on the transition, seven existing models are being "refreshed" this year, with redesigned interiors, exteriors and powertrains that will improve fuel efficiency by about 5 percent, according to officials.

"We can't wait until the renewal of some of our existing products; we have to make significant changes to them now," said Chrysler Group spokesman Rick Deneau.

For dealers, any change in the lineup can't come soon enough. In the fold since 1975, Fields Chrysler Jeep Dodge in Northfield saw its new-car sales drop 18 percent last year. The balance sheet was salvaged in part by used-car sales and the demise of its competition, said general manager Jim Moyer.

"The fact that these other dealers closed around us, we picked up a lot of orphaned customers, and that resulted in more service business, which helped our fixed costs to pay the bills," Moyer said.

At Napleton's Northwestern Chrysler Jeep Dodge, new-car sales were down 24 percent. While robust used-car sales and service kept the nearly 30-year-old dealership in the black, management is bracing for another challenging year.

"I really don't see a Chrysler Jeep Dodge store flourishing until these new launches come in and until they start integrating the new, fresh product for us," said Rob Crane, a partner with the dealership.

If the marriage with Fiat proves successful, it would not be the first time Chrysler has risen from the scrap heap. On the verge of bankruptcy in 1979, the automaker was rescued with the help of a government loan guarantee. The assistance enabled Chrysler to roll out a line of smaller, front-wheel-drive cars that revived its fortunes and made its president, Lee Iacocca, into a ubiquitous and iconic pitchman.
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