The Product Development Pause That Refreshes

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.