By on February 11, 2010

Fiat/Chrysler CEO Sergio Marchionne was supposed to give a speech in conjunction with the Chicago Auto Show today, but backed out at the last minute, sending Dodge honcho Ralph Gilles in his place. The Chicago Sun Times was able to snag an interview with the globetrotting CEO though, and it features some of Sergio’s more candid (if confusing) comments on the state of new product development at the New New Chrysler. Of particular interest is his very apt criticism of Cerberus’s mismanagement of new product development, specifically the decision to replace the 300 before the Sebring.

The biggest market segments in the United States are the C [midsize cars] and D [large luxury vehicles] segments. If you only have a dollar to spend that’s where you go spend it, especially if you’ve got products that are structurally not working.

The decision was made to invest elsewhere. So we developed a brand-new platform for the 300, a decision that took capital that may have been required elsewhere to go play in a different sandbox. Until you’re clear about where you need the money, where the money needs to be spent to ensure longterm survival – that part of it was substantially missing.

We’ve done all the reallocation. The 300 we have now. We’re going to launch it. God bless it. It’s a brand-new car. But we’re taking a lot more care now about developing the C and D architecture because that’s the future of the house….

We recognize the problems of the Sebring. We know that it’s not the most loved car by car enthusiasts. Until we actually deliver the new architecture, which is going to be this year, and effectively re-launch our D-segment presence, it’s going to be a difficult year. … The second half is going to benefit from all the product launches. … I gotta be able to get to next Christmas. When we went to bankruptcy, it’s not as if the bankruptcy judge gave us 13 new architectures and six new models. He didn’t. He gave us what the old car company had.

When asked what Fiat contributed to the new Sebring, things got a little more confusing:

The only thing we’re delivering to Chrysler is the basic platform. Everything from that point on, once we deliver it, is up to Chrysler. Having said this, it’s not an inconsequential amount of knowledge that’s being transferred. Without it, you can’t build the car. Once we have the architecture in house, then we can start peeling off the nameplates. The architecture is interesting because it’s capable of doing both the C and D segments. So it’s versatile and it will allow us to effectively cover half the American market.

At this point, the Sun Times’ Kirk Bell cuts in with:

[Author’s note: While the previous two answers could be read to indicate that the Sebring due later this year is all new, that is not the case. A heavily revised version of the existing Sebring will come this year and an all-new car based on a Fiat platform is scheduled for 2013. The architecture for that later model is being delivered to Chrysler engineers this year to begin developing the car due in 2013.]

And these refreshed products are where the big questions lie. Ever since Chrysler’s five year plan announcement, we’ve been hearing about these “heavily revised” products and how heavily revised they will be. On this point, Marchionne has only the same old hype.

The first half of 2010 is going to be more difficult than the second, simply because the product offering doesn’t start delivering until the second half. The first real viable, tangible evidence of this is going to be the Grand Cherokee in [quarter two], which is brand new. Then we’re going to see the Wrangler coming out with a significant update. I think there are 14 other interventions, most of which are significant enough to warrant almost a new product launch – that will come out in [quarter three] or [quarter four] this year.

This is where the Kool Aid detectors start going off. If there are really 14 new-product-launch-worthy “interventions” by the end of next year, but they weren’t planned until last Summer, how thorough can they really be? Think about it: 14 “significant” product overhauls in (conservatively) 18 months. Methinks Sergio has a different standard for what “warrants almost a new product launch.” Meanwhile, don’t expect any more evidence one way or the other, because Chrysler has taken this opportunity to make a cheap stand on “principle.”

Who does Chrysler think it’s currying favor with by not-so-subtly ribbing GM for its overhyping tendencies? As much flack as GM has received (on this site and elsewhere) for relentlessly hyping vehicles for years before they go on sale, Chrysler’s “trust us” act isn’t any more inspiring for the simple reason that their underlying problem is the same as GM’s: unpopular and uncompetitive products for sale right now in key segments. The difference is that GM has shown signs of real product improvement, whereas Chrysler simply has not. Moreover, if Chrysler wants its 14 refresh roll-outs to be noticed by consumers, it’s going to have to do more than roll all of them out in one frantic six-month period.

Let’s face it: Chrysler needs buzz, hype, awareness, some kind of excitement surrounding its future generally and its forthcoming products in specific (if only in the irritating “teaser” format) almost as much as it needs anything else. Because as things stand right now,the baseline perception of Chrysler is of a dying company with nothing to offer. In this light, Chrysler’s principled rejection of hype is far more likely to be interpreted as keeping rushed semi-refreshes under wraps so they won’t be mocked to death by the time they go on sale. If that’s not the case, Chrysler has nothing to lose and everything to gain by building consumer awareness of new products. If it is, well, the truth will out sooner or later.

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34 Comments on “The Product Development Pause That Refreshes...”


  • avatar
    ott

    Was this filmed before the show started? Where are the spectators? Oh wait, I see them–they’re dusting off the Chryslers.

  • avatar
    Gregg

    That Twitter could also be a jab at Ford Fiesta, which
    has been hyped for more than six months now. The problem
    is that the Fiesta strategy seems to be working.

  • avatar
    Conslaw

    If you have an ugly bride, don’t you keep the veil on until “you may kiss the bride?” Just saying.

  • avatar
    George B

    I agree that Fiat/Chrysler needs some plausible story of how they are going to be in business a few years from now. Maybe they could make a tour of some of the more interesting Fiat models, moving them from dealer to dealer as a way to get people to visit dealerships. Doesn’t fix the Sebring, but seeing the future Fiats in person might make Chrysler look less dead.

  • avatar
    crash sled

    Does Marchionne even care about Chrysler? To the best of my knowledge, Fiat hasn’t put a single dollar or lira into Chrysler, but I’m assuming he’s gonna get his cut when those Fiats are rebadged as Chryslers. What is he truly providing here, and what is Chrysler providing?

    I just had lunch with an old automotive hand, and he says Chrysler is done in less than 5-years. I think he may be correct. Fiat is gonna hornswoggle their way into some truck platforms, and let everything else die on the vine, and send all the VEBA and PBGF bills to Government Motors. Maybe even pick up some import juju on the rebadged Fiats, if he’s lucky, and Government Motors approves.

    • 0 avatar

      I’m sorry but lira hasn’t been a currency since last century, and Chrysler’s truck platforms are utterly irrelevant outside of the states.

      Everything that’s happened since he took the helm suggests Marchionne is giddy about Chrysler, and that’s not surprising. However badly dented the brand equity in Chrysler and Dodge is, it’s still salvageable as a means to sell cars to Americans, and Jeep continues to walk on water in branding terms (miraculous when you consider some of the things its badge has been plastered onto of late).

      OK so they’re maybe not the first brands you’d choose, but for growth into the US market they’re serviceable, and that’s better than what Sergio had. Given that any Americans who’ve heard of FIAT seem to still associate it with the rust buckets of the 70s…

      What FIAT are providing here is a leg up for Chrysler to producing competitive modern cars. FIAT may not be VW but they’re good at that all the same, and they’re experts in the segments which must grow stateside over the coming decade – namely small, fuel efficient cars. Chrysler provides the branding to sell those cars in America. If your friend thinks that opportunity is less attractive than some old truck designs (which nobody outside the US will want to buy) then I’d respectfully suggest that he’s living in the past.

    • 0 avatar
      crash sled

      Hmmmm, so you’re saying that “Chrysler’s truck platforms are utterly irrelevant outside of the states…” (true), and then you follow up with a couple hundred words on the reasons why the states matter so much? (also true)

      Quite the contradiction, no?

      Yes, despite your misguided statement, the trucks are the plum. They’re plum because they’re established in the NA market. That’s what Fiat wants to hijack here. So would I. It’s the only Chrysler product with any real value, same as pretty much all the Detroit 3′s offerings (Corvette, Mustang, and some others notwithstanding).

      You also claim that Chrysler “…is still salvageable as a means to sell cars to Americans…” (true), which is exactly what Fiat seems to be doing with their rebadged cara (not the trucks, they need to hornswoggle those trucks away, as they have none). So Marchionne is using Chrysler for some badge engineering (badges only), and putting in not one dollar or lira, just as I’ve been led to believe.

      Hey, you seem to be talking just like by buddy was yesterday. You and he have the same Fiat strategy for Chrysler!

      That strategy is, that Chrysler is gonna die.

      However you and he do seem to disagree on the trucks, what is that you called them… “old truck designs”. Lemme give you the words from Lido many Chrysler moons ago, when some confused souls in product development over there were whining about all those ugly minivans they were selling, nothing sexy at all, no cool products.

      Lido explained to the fools the following: “if we don’t sell minivans, we don’t eat”.

      Today, if the Detroit 3 don’t sell trucks, they don’t eat, and they don’t even eat then, unless Government Motors provides them food stamps. But only their trucks are profitable, basically. Surprising you’re posting here otherwise, I’d thought this was a knowledgeable enthusiast site.

      The trucks sure aren’t “the past”, they are the present and the future, if you’re paying attention. Believe me, Marchionne is, and that’s his true goal here, because he’s getting nothing much but trucks from Chrysler that I can see, and he’s paying nothing.

    • 0 avatar
      windswords

      Crash sled,

      2 things:
      “Chrysler is done in less than 5-years”. Apparently your old “old automotive hand” is making the same prediciton that others have made SINCE the late 1970′s. And they’ve never been right.

      Even if Sergio got all of Chrysler’s truck products (that’s not a sure thing), and even if they continued to sell at the same rate they are today (again not a sure thing) – it’s does not fulfill Sergio’s stated goal: He has gone on record as saying that no company can survive unless they sell 5-6 million vehicles a year. Trucks would only bring him a million or so (again assuming they continued to sell at the same rate while the rest of Chrysler died off – notgonnahappen.com). Sergio needs Chrysler to be successful if he is going to be successful. And that’s right out of his mouth.

      You also forgot that Sergio is going to use the new LX platform for a future Lancia or Alfa model as well as the new V6 engine. So apparently he is interesed in more than the just the trucks.

    • 0 avatar
      thalter

      windswords:

      Um, no, Chrysler’s death predictions were actually quite correct, twice even. Chrysler would have gone bankrupt in the late 70′s were it not for loan guarantees from the US Government, and *did* go bankrupt last year (even after receiving a bailout from the US Government).

      Their strategy for the 2010 appears to be no different then what got them here in the first place – Mediocre vehicles, sold at a loss with high incentives.

    • 0 avatar
      Roundel

      I think you need to go back and read some quotes from Sergio regarding the “rebadge” issue. He has stated many times that he is delivering only platforms. The C/D segment car will have a new platform in 2013, but these cars will be designed with North American resources. He’s not sending a Bravo over and calling it the Sebring.
      If your going to take pot shots at least research your position.

    • 0 avatar
      crash sled

      windswords,

      To the list someobdy mentioned above, I’d add that Lido had Chrysler to the brink of insolvency less than 10 years after the 1979 bailout, so they’ve been here often. Many reasons for that checkered history, and you likely know just as many or more than I do.

      Remember, you have to take the square root of whatever Marchionne says, because he’s blowing smoke squared. That’s why the blogger posted this… to poke holes in the guy’s product offering bubble. Is it truly a bubble? We’ll see, but the tangible signs sure aren’t good. The volumes you and Marchionne say must be met are just as much a nail iin Chrysler’s coffin as they are a potential lifeline.

      Those million trucks you’re scoffing at are also a lifeline, the only tangible and profitable one on the table right now (questioin being, is it merely a lifeline for Fiat?). I’m sure this blogger will let us know if any other lifelines get thrown over the side, but if they don’t… sayonara Chrysler, or areverdici or whatever Sergio says, before taking another sip of his vintage wine.

    • 0 avatar
      windswords

      crash sled,

      Two more things.

      First, the second brush with death was overblown. A creation of the media to sell news. I was there. Yes they fell on some hard times, and had lost their way after going on a binge of buying up companies that were not part of their core business (Lambo and Gulfstream being the two biggest). But they never came close to going under. Sorry, but the “brink” wasn’t even in sight. And 1979-80? They would have gone bankrupt without the loan guarantees but before that something else happened. The Shah of Iran was deposed and gas prices shot up dramatically. Up to that point Lee wrote in his 1984 biography that he thought their chances of making it were pretty good (without any loan guarantees). But an event which they had no control over sealed their fate. Now we see history has repeated itself.

      Second, if you wish to subscribe to the conspiracy buff line about diabolical corporate chieftains plotting to snatch pieces of someone elses corporate silverware like they were a master thief you are welcome to do so. But in my lifetime I have yet to see any of these types of theories pan out. I prefer to take Sergio at his word. A million trucks (and it will never be a million) is good but will never be a lifeline to anyone, let alone FIAT. When he turns things around at Chrysler and takes the majority stake in the company that he wants to have I will be toasting him with a vintage wine of my own.

    • 0 avatar
      crash sled

      Windsword,

      The brushes with death have been a continual issue with Chrysler, and you know this. Now, you can argue about varying degrees of brush, brush intensity, brush spacing, brush material engineering, ad nauseum… fact is, the final brush came when they were forced into the “merger of equals”, then summarily brushed over to a gang of unwashed Wall Street sharks… and now they’re a part of Government Motors brush shop, along with the rest of the Detroit 3.

      Many reasons these guys arrived there, but one thing’s for sure… they earned their place, and they can’t blame it on anybody else, or any other circumstances. All the Detroit 3 earned their current status as subsidiaries of Government Motors.

      It isn’t “conspiracy theory” to know that OEM’s have historically pillaged each other, and each other’s products. It’s frickin historical reality. That’s what they do. That’s what we WANT them to do, well, we did until we bailed out Chrysler 30 years ago, and the automotive industry clock STOPPED. When Ford was headed for titts-up in the 50′s, the Ford family was forced to relinquish their majority of shares, by the financiers, not government. That all ended in 1979.

      I almost feel bad for Chrysler. They got gangbanged by the Germans, pimped out to Cerberus, and now they’re receiving the soft, seductive ministrations of the Italians. But in the end, they always get the same thing.

  • avatar
    thalter

    Paul Niedermeyer really needs to a CC retrospective on the end of days of Studebaker and AMC. I wasn’t around to witness the end of Studebaker, so I don’t know how this parallels, but this sure looks a lot like AMC’s final days:

    Shotgun partnership with foreign automaker with its own financial and quality difficulties (Renault), hopes pinned on game-changing new products (AMC Eagle, stillborn AMC flagship that became Eagle Medallion), before finally being plundered by a corporate raider for the one asset of value (Jeep brand).

    Interestingly enough, the last chapter could play out exactly the same.

    • 0 avatar
      Robert.Walter

      There are about a half dozen clips from a Studebaker promotional film highlighting Stude’s diversification actions and their big clean-up, repaint, rally the troops effort … (It’s really a nice film.)

      Looks good if you were watching it when it came out, but with the perspective of hindsight, and once you know how the story ends, one can see, despite action and good intention, how quickly a company understress can abandon a major portion of itself. (Despite the CEO’s intentions, the BoD decided to stop funding cars & trucks, and instead concentrate on other conglomerated consumer and industrial products.)

    • 0 avatar
      educatordan

      Don’t forget the “Jeep Curse” it brings on any automaker who purchases it.

      BTW I don’t believe in the Jeep Curse the poor brand has always been paired up with partners who ended up being lesser than Jeep was.

  • avatar
    sitting@home

    “When asked what Fiat contributed to the new Sebring … The only thing we’re delivering to Chrysler is the basic platform.”

    A new platform ain’t gonna fix what’s wrong with the Sebring (or Avenger or Caliber). For all I know there might be a Ferrari V12 under the hood, the seats feel like you’re sitting in Dolly Parton’s cleavage and it corners like a TIE Fighter flown by Darth Vader, but the things are just so damn ugly I would never consider even test driving one. I’m pretty certain a competitive vehicle could be designed on the current platform but what is needed is some designers, stylists and project managers who have a clue. Giving a new platform to the same old guys will probably result in a similar type of monstrosity.

    • 0 avatar
      Seth L

      I think the Sebring Platform is still on the same one shared with the Mitsubishi Galant? If so, it’s old as the hills, and was never much of a contender to begin with. So I disagree, a new platform is desperately needed.

      Edit: Scratch the bit about the Galant, I guess they’re not the same. Instead it’s the evolution of the K-stratch into the JR platform, to which, my comments still apply.

      And Sitting on Dolly Patron’s Cleavage doesn’t sound fun at all. Kinda like driving a water bed.

    • 0 avatar
      sitting@home

      In this class of cars the platform doesn’t have to be anything special, the styling and finer details do.

      At least sitting between Miss Parton’s assets you’d have some good side bolsters.

  • avatar
    Ion

    Spending all that money for a new platform for the 300 strikes me as dumb, inserting fingers into light sockets dumb. I thought the current platform wasn’t bad, but that the interior and reliability were extremely uncompetitive.

  • avatar
    Robert.Walter

    Guys, once you get a new platform from Fiat, you have to do a new interior and exterior as part of the deal …

    BTW, my take on why they are not showing the vehicles is that CG is not being a little sex tease, they are not able to show the vehicles because they are not ready … they are busy designing and testing them … such is the compressed timeline they must be working under.

    Reason Ford showed the Fiesta for a pre-launch eternity was 2-fold, 1 because the car existed, and 2 because they wanted to use this as proof to the markets that they had gotten their Helmut Schmidt together… (Chrysler is still working on the physical properties to do this.)

    BTW, I never did comprehend the story of the Chrysler C/D-segment development efforts (the vehicle to replace the current Sebring) … before the melt-down, this effort went thru two Chief Engineers (last one named Donahue or so) before seemingly being abandones (with the Donahue-guy leaving the company ((was it for Tesla, and he later jumped from there?))

    What was the result of all that pre-Ch-11 C/D development, and where did the designs go, or was that just a bunch of Cerebus-buzz-vapourware?) Anybody got a clue?

    • 0 avatar

      Urban legend is my guess. Donahue left in March of 08, and that summer was a steady trickle of “do we really do this or do we just rebadge the Altima” stories, before eventually morphing into the 200C show car. In other words, it turned into a last-gasp Cerberus “EV,” which are top-notch vapor credentials. It was once described thusly:
      “We will manage the time line accordingly to always make sure we have a product that will satisfy the market place. You can take that to the bank.”
      Maybe there are some Donahue-era doodles, but I wouldn’t be optimistic. They’re going to use a stretched Fiat C-Evo (Fiat Bravo/Lancia Delta) platform… in 2012. For now, Robert’s right… they keep the leftovers in the microwave for as long as possible.

  • avatar
    Dimwit

    No, what he’s not saying is that the Mercedes lifeline has run out. Their only competitive product lines except for RAM have been built on old MB tech and they have to come up with something new for that before they can address the other problem children. Wrangler will get a facelift to look fresh and keep those dollars flowing. The Cherokee has been using the MB motors except for the hemi and maybe it’s cheaper to redo the platform and try to rejig for FIAT engines.
    If those 3 lines do ok, then there could be enough cashflow to keep the wheels from falling off.

    Could be. Don’t put down any bets in my name please.

    • 0 avatar
      Wheeljack

      Assuming you’re talking about the Grand Cherokee, the only MB engine ever used in it was the 3.0L diesel. The other three engines (3.7L V-6, 4.7L V-8 and 5.7L V-8) have nothing whatsoever to do with MB.

    • 0 avatar

      Daimler barely gave lug nuts to Chrysler during their flawed marriage.In fact, Daimler withholding tech was a huge and chronic problem for Chrysler during the battered wife phase of the post-nuptials.

    • 0 avatar
      pgcooldad

      Not only did MB witheld technology, money too was diverted to MB in order to fix all their issues. Wolgang Bernhart was the only German who actually could have helped Chrysler but he got the boot when he embarassed Daimler, or better yet Mercedes with the ME Four Twelve.

      “The SLR McLaren is the top of the Mercedes [sport] line.. they’ve spent millions on it.. and they’ve spent years on it.. it represents the best of anything Mercedes.
      Enter the ME-412.. they took a Mercedes engine.. took it to Mercedes tuner… they spent a year.. and outdid the SLR McLaren..
      Chrysler can do in 12 months what it takes Mercedes years.. and not only can it do that, it can do that with their parts for less and better to boot!”
      http://www.allpar.com/cars/me412.html

      Also, very few 3.0L Diesels were used on the GC and Liberty, the 3.7 and 4.7L Engines are built at the Mack Engine Complex in Detroit.
      http://www.mapquest.com/maps?city=Detroit&state=MI&address=4200+Saint+Jean+St&zipcode=48214&country=US&latitude=42.382337&longitude=-82.980624&geocode=ADDRESS

  • avatar
    gslippy

    I don’t have a problem with Marchionne’s statements.

    Chrysler/Fiat is different from GM in that GM didn’t have the additional burden of merging two companies, and so its product development has been able to continue unimpeded. Moreover, GM’s products aren’t *quite* as derelict as Chrysler’s.

    When he speaks of the new Sebring, he is referring to the 2013 model. That’s the one which gets the Fiat goodies underneath, and the platform is versatile enough to support the C and D segments. But they shouldn’t call it the Sebring. Very bad move.

    Fiat simply cannot rush Chrysler’s new product development after years of neglect by Cerberus. Integrating the companies’ platforms, performing meaningful market studies, and remaining solvent are difficult and time-consuming tasks.

    I actually became more encouraged about Chrysler’s future after reading his comments.

  • avatar
    jimboy

    It is my understanding that most of the refreshes we are seeing now were instituted under Cerberus management to try and mitigate the damage (lack of investment) done by DCX. I’m sure more was done by Fiat Group as well when it took over. Many of you seem unaware of the long lead times to make running changes on a vehicle already in production with a locked in design and supplier pipeline. I think Chrysler has done well to enhance its current stable while pushing forward on new product development at the same time. After being teased by the Dodge Demon and the 200C for years, and not seeing any product follow up, I’m content to wait and see what we’ll actually get. I hear (read) a lot of the people on here complaining about Chryslers dated, inefficient, blah,blah,blah..platforms, but remember folks, the oldest vehicle in the lineup is the 300 (except the pt cruiser, which is going away), and it is only 6 years old and has had one refresh already. Essentially the product is there, it just needs some updating. Even the much maligned Sebring/Avenger platform has had most of its critics complain about execution and style. Both are relatively easy fixes. I think when we do see new product/interventions, many will be very pleasantly surprised. And if you think the older platforms are crappy/ bloated, then why does my 2 ton, hemi V-8 wagon get better mileage than many eco crap boosted V-6 crossovery things from across the various ponds?

    • 0 avatar
      Wheeljack

      I agree – for example, if the prime complaints with the Sebring/Avenger are styling, interior and dynamics, all those things can be fixed…and fixed in such a way that you would never believe it’s the same car as before.

  • avatar
    bmoredlj

    So Chrysler may have to field the Sebring virtually as-is until 2013?! I hope those “significant revisions” are for real, and include making the car more attractive on the outside and fixing the crappy quality on the inside.

    I spent some time in the Sebring at the Philly Auto Show, and its cabin welcomed me with a light, airy palette and soft, supple leather seats with a nice aroma, but also a whole lot of very cheap fake aluminum trim, and the plastic seam on the e-brake sliced my finger. The doors felt tinnier than Hyundai Elantra’s, and this car’s sticker was pushing $30K. That’s a sorry state of affairs!

  • avatar
    mjz

    I think Chrysler’s strategy not to show the new products until about three months before intro is very smart. If they show the new Charger/300/Grand Cherokee now, who’s going to want to buy the current model? Customers will decide to wait, and they will have trouble selling the current model, which they can ill afford. In GM’s case, the Camaro/Volt early previews created demand for future products that had no current counterpart in GM’s line-up. In the cases of the Fiesta/Cruze early previews, both of these products were already in production in other parts of the world, so the “preview” was anti-climatic at best.

    I do agree that showing the new products early might provide Chrysler with a more positive future outlook, but I think the risk to current sales is too great. We will be seeing the new products soon enough.

  • avatar
    mjz

    Ed, per your “request”, a competitive website has published a still of the new 300 front grill taken from a Ralph Gilles presentation in Chicago. If the rest of the car looks as good as the front, Chrysler will have a winner. LED headlamps are a dead ringer for the new Audi A8.

  • avatar
    AccAzda

    Can I just say how nice it is to actually see a Chrysler badge and a Sebring name badge on a Sebring.

    Cant say I remember the last time I saw that happen


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