Detroit Bureau on Twitter

Can This Latest Plan Save Chrysler?

Monumental challenges ahead as damaged brands have few new products in the short run, but will get freshenings.

by on Nov.04, 2009

By being "cheap" Chryser is running at break even.

By being "cheap" Chrysler is now at break even.

Can CEO Sergio Marchionne pull off another successful turnaround ala Fiat? That is the question being debated this morning in automotive circles.

Chrysler Group reported total U.S. sales for October of 65,803 units, an increase of 6% compared with September, but a decrease of 30% compared with the same period in 2008.

After years of financial engineering by corporate raiders at Daimler and Cerberus that stripped it of assets by loading it with debt,  and also left it short of design and engineering  talent, as well as purchasing and manufacturing expertise, crunch time has come.

Chrysler today has a quality-dreadful, gas guzzling truck-ridden lineup that is distinctly out of touch with the times. So it’s either the official public beginning of the end or start of another, yet another, comeback. That’s the debate.

In Auburn Hills against this backdrop, the embattled CEO of the New Chrysler Group came out swinging at the media who opine that the company is in dire financial condition and will not survive. It is necessary, of course, that Chrysler retain existing buyers and attract new ones if it is going to exist. So projecting confidence is the communications strategy of this day and for many more days — years –to come.

On cue in his opening remarks, Marchionne claimed that Chrysler Group now has $5.7 billion in cash on hand, up $1.7 billion from $4 billion in June when it emerged from bankruptcy. Chrysler ran break even in September, Marchionne said, and actually made a profit of $200 million in the third quarter – all assertions impossible to access since the privately held company is not filing statements that meet generally accepted accounting participles.

As a side observation, this puts the other North American taxpayer-propped automaker, General Motors, under extreme pressure to make similar claims when it releases its first post bankruptcy statement later this month. But this was sideshow to the three ring circus that was now well underway at Chrysler headquarters.

Marchionne said the group think severely underestimated the cost cutting and ongoing operational economies that are now in place. In fact, he said the company is being “cheap,” which would make it successful and buy time for the new team leaders to remake the business.

Chrysler said it will have 21 new models developed with Fiat by 2014 and share three vehicle platforms. Whether this will be enough in time to make a success of it remains to be seen.

The brand presentations started with Dodge, which will separate Ram trucks from Dodge cars in the first move in repackaging the existing vehicles into separate Dodge and Ram brands.

It’s the car side that is clearly in trouble, since the truck offerings are relatively fresh, and sort of competitive in the  severely diminished truck  segment.

So no surprise that the current Viper will cease production as another supercar is under preparation — with a hint that the Fiat-owned Ferrari and Maserati would provided some unspecified resources and technology.  A new  performance car will eventually emerge and  its’ hoped it will  provide a halo to what is now a lackluster line of Dodge cars. And, yes, the old Corvette cliche’ was repackaged in the process, along with a new Dodge logo, as the claim was made that going  forward there will be little bit of Viper in all future Dodge cars.

Ralph Gilles, CEO of the Dodge brand, said that 11 new or completely restyled models would appear by 2014. The first new 2011 model is a seven-passenger cross-over vehicle coming out in late 2010, which appears to be a carryover from pre-bankruptcy product plans.

Dodge  will then revise and reposition its  Nitro sport utility vehicle to be more of an urban cruiser for younger buyers and less of an Jeep-like off- road vehicle. Dodge also will get an all-new mid-size sedan to replace the Dodge Avenger in 2013. Revised compact and sub-compact sedan are also promised in the same time frame.

For a detailed product plan of all Chrysler Group brands, click here.

Tags: , , , , , , , , , , ,

Comments are closed.