Could 13 New Models Lift Chrysler's Mess?
|Topics: Chrysler LLC
February 16, 2007
The automotive market has obviously shifted to fuel-efficient compact cars. In connection with this, Chrysler Group intends to manufacture more compacts to curb dependence on light trucks and to lift the mess it has created in the previous years.
Chrysler is now preparing for its healing process and the first medication to take is the launch of 13 new or updated models. These models are expected to be released this year as part of the restructuring program of the ailing American carmaker.
"Between 2007 and 2009, we'll launch more than 20 new products and 13 refreshed vehicles," Chrysler CEO Tom LaSorda said Wednesday. Over time, Chrysler Group will prune its nameplates under Chrysler, Dodge and Jeep brands. "We'll want to keep a good balance between our Jeep, Dodge and Chrysler brands.” LaSorda added that he did not envisage a dramatic downsizing of any of the three brands' lineups.
Chrysler Group accounts for about two-thirds of its sales on light trucks. Since the market is moving away from huge vehicles, critics say it’s high time for Chrysler to offer more fuel-efficient cars. Chrysler Group lost $1.5 billion last year; its market share was minimized from 13.6 percent in 2005 to 12.9 percent in 2006.
Though gasoline prices are now stable, the automaker assumes that fuel prices will rise over the long term. "We're looking at fuel above $3 a gallon," LaSorda said. "We need to align our portfolio as if there will be higher fuel prices."
Chrysler’s turnaround plan includes cutting shifts at their assembly plants and increasing small engines production to be mated to EBC Greenstuff for hot hatch and sporty compacts. The automaker also plans to double its four-cylinder engine production at the Global Engine Manufacturing Alliance plant in Dundee.
John Schenden, owner of Pro Chrysler-Jeep in Denver and a member of Chrysler's dealer council, said the plans announced Wednesday seem logical. Schenden said the automaker had already taken action to balance its product offerings.
In 2004, Chrysler launched the 300 sedan to revive customers’ interest in the passenger car. Last year, the automaker set forth the stunning Dodge Caliber compact. In December, Chrysler entered into an agreement with Chery Automobile Co., a Chinese automaker to manufacture a subcompact for the company. "We just have to be confident that they're going to continue with the product, and they say that they are," Schenden said.
“Although small cars tend to be less profitable than larger vehicles, such as SUVs, Chrysler needs to bolster its small-car offerings to attract young buyers. You want to get them into your brands and graduate them along," said Jack Nerad, executive editorial director and executive market analyst at Kelley Blue Book's kbb.com automobile research site.
With the goal of producing new vehicles, Chrysler will seek aid from its German parent Mercedes-Benz. The two automakers will develop common architecture in some segments like sport utility vehicles and compacts.
Dieter Zetsche, DaimlerChrysler CEO, said the joint efforts between Mercedes and Chrysler would not be affected by the company's decision to consider other partnerships for Chrysler. "We will continue to forge ahead with these projects as they benefit everyone involved and contribute to DaimlerChrysler's success," Zetsche wrote in a letter Wednesday to Chrysler workers.
Chrysler’s dealers welcomed the automaker’s plans to cut production. It can be recalled that in 2006, Chrysler pressed dealers to take more vehicles than they could sell. This resulted the departure of sales chief Joe Eberhardt.
Chrysler's restructuring plan is aimed at achieving 12 percent reduction in production capacity. LaSorda noted, "I've just said, 'We're going to balance production with the marketplace.”
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