Chrysler Needs a Product Plan

Private equity ownership of Chrysler LLC, by Cerberus Capital Management, makes finances less transparent, but the new leadership is clearly desperate.

Spending is still exceeding revenue, Chrysler will spend $1 billion more than it collects in 2007.

Experts predict 2008 to be the American auto industry's worst year in more than a decade. I say it will be even worse than the typical prognosis of 15.6 million sold.

Chrysler has kept open the option to cut more jobs next year.

Where's the Beef?

The cost cutters don't get it. What Chrysler needs most is fresh product.

When Forbes.com listed the top ten worst cars for 2007, the top five were Chrysler products.

Chrysler Sebring, Dodge Nitro, Jeep Liberty, Dodge Caliber, and Dodge Magnum drew Forbes criticism.

Even the company's redesigned models arrive in showrooms with incentives.

Chrysler has cut four losers from its lineup; Dodge Magnum, PT Cruiser convertible, Chrysler Pacifica crossover, and Crossfire roadster. Four more model cuts are coming.

Many of Chrysler's best sellers reside in stressed segments; SUV's, pickups, and minivans. These exposures must be defended, compromising the company's ability to invest in new product.

A mere one third of Chrysler sales are passenger cars, the models texas-cars-and-dealerships.com thinks are the future.

Analysts say Chrysler desperately needs high-mileage subcompact cars.

I say the real battle is for the mid-sized sedan market. Bob Lutz at GM has wisely invested in this crucial future segment with the very well received 2008 Chevy Malibu.

Americans are going to be reverting to cars from SUVs and trucks, the middle class will buy sedans as they did in the past.

Sedans and coupes offer the best opportunity for the key design changes I believe are coming: slick aerodynamics and composite carbon fiber weight reduction.

So what does Chrysler introduce for 2008? Dodge Journey full-size crossover, and a redesigned, reduced-agression Dodge Ram pickup.

Dodge Challenger muscle-halo car, with the hemi-powered SRT8 rumored to sticker at a mere $37,995, will see very limited sales.

Trick ponies and boxy heavyweights will not save Chrysler.

Chrysler needs a car-guy, a product wizard like Mr. Lutz at GM, with the rank to push a well conceived line of cars through the badge-engineering bureaucracy.

GM has shown the way with real winners like 2008 Chevrolet Malibu and Cadillac CTS, and several new hybrids.

This year GM will launch the 2008 Pontiac G8, redesigned Pontiac Vibe, and Saturn Astra.

Dual-mode hybrid renditions of Saturn Vue, Chevrolet Tahoe, Chevrolet Silverado, and GMC Yukon are also coming.

Where will the revitalized GM steal customers? Mainly Chrysler and Ford.

Chrysler's outsourcing the subcompact segment to China's Chery is a stopgap measure. The Chinese have an agenda that doesn't include saving Chrysler.

Chrysler has decades of selling poorly designed and badly marketed vehicles to make up for. Cleaning up the marketing channel and dealership debacle will not be effective without a completely revitalized approach to product development.

I don't think break-even can happen by 2009 as management has planned.

Especially with the dumb SUV ads, where a singing wolf appears in the rear seat invoking teddy-bear environmental images, setting the tone.

America needs fuel efficient cars, not more SUVs, to maintain a lifestyle locked in by the widely disbursed interstate highway transport infrastructure.

Who will provide them?

Chrysler?

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