Chrysler Suicide Watch 5: Necessity is the Mother of Intervention

In the late ‘70’s, Chrysler and Mark Knopfler had a lot in common. The automaker and the guitarist were both in dire straits. Unlike the British rock group, Chrysler’s sales were stuck at rock bottom. Most of the automaker’s offerings were badge engineered clones. Overproduction and their so-called “sales bank” had pushed inventory to an all-time high, dragging profits to an all-time low. Enter Lee Iacocca. Lee took draconian measures: cutting models, restructuring, trimming fat and introducing radical new models. Within a few years, Iacocca’s intervention had transformed a company on the brink of disaster into a profitable enterprise. Twenty years later, Chrysler’s come full circle. And once again, it’s time for intervention.

First, someone’s got to get Chrysler out of denial. The company must face the cold hard truth that they’ll never be General Motors, Toyota or (God forbid) Ford. By attempting to be a “full-line automaker,” Chrysler’s diluted their model lineup to the point where it’s become an incoherent farrago of fragmented failure. As part of this realization, Chrysler must also dump the GM mentality. They must stop looking at the next new model as The Next Big Thing: the car/truck/minivan that will save the company. Instead, Chrysler should take a holistic approach to their mental illness.

Chrysler should step back, take a deep cleansing breath, and reassess the role of each of their divisions. At least they have a good place to start. With just three divisions under their corporate umbrella, Chrysler’s ready to realign each division to target specific market segments (unlike the two other domestic automakers with eight divisions apiece,). A logical realignment: Dodge builds family transportation, Chrysler creates premium vehicles and Jeep handles all the truck/utility vehicles.

With those demarcs clearly set and understood, Chrysler can finally set about killing overlapping, duplicative and extraneous models. Say goodbye to the Aspen, Crossfire, Stratus, Pacifica, Magnum (rolled into Charger), Town & Country, Nitro, Patriot, Compass, Viper, Sprinter (returned to Mercedes) and Commander. And while we’re at it, abort the Challenger.

Once that’s done, Chrysler can realign their remaining models within the new corporate structure. Dodge’s lineup would consist of an economy car (manufactured under their new agreement with China’s Chery but designed entirely on this side of the Pacific), a compact hatchback (Caliber), a family sedan and wagon (Charger/former Magnum) and a van (Caravan). To underline its commitment to value-for-money, every Dodge model should offer a BlueTec diesel engine option.

Chrysler Division would offer a premium compact (next generation PT Cruiser with a better name), a premium midsize sedan and convertible (redesign of the redesigned Sebring), a premium sedan (300) and a luxury sedan and convertible (based on the E-class platform but totally American in design and execution). Every engine offered should be based on the Hemi— already about to be offered “free."

Jeep should keep their current lineup sans the faux Jeep models axed above and add a line of pickup trucks. Rather than try to out-mega GM, Ford and Toyota, Jeep should concentrate on the long-neglected compact truck market with a Wrangler-based midsize model (replacing the Dakota). Jeep should also offer a diesel option across the board and every 4WD model should be “trail rated.”

Once this realignment is complete, Chrysler has to address their dealer network. Since the new regime would eliminate brand overlap, all three brands could be offered at every dealership. That said, culling is a big part of the program. Chrysler needs to make sure there aren’t too many dealerships in any one area; their dealerships should compete against other brands, not against each other. If this means closing or consolidating dealerships in metro areas, then do it.

Along with “right-sizing” their dealer network, Chrysler should step-up and become the first major manufacturer to provide a totally “dealer-less” alternative for customers who desire it. If a buyer wants to shop, negotiate, arrange financing and close the deal on the internet, let them. Instead of haggling with a specific dealership, the customer would work through a centralized national or regional sales office. Once the transaction was complete, the customer would select where they wanted to take delivery, then go to the dealership to sign on the dotted line and pick up their vehicle. Consumers have no problems buying books, clothing, and even groceries over the internet. Why should car shopping be any different?

If DCX is serious about keeping Chrysler Group alive, they’ll have to take some drastic measures. A band-aid here and a Prozac there may keep it limping along, but in the long term the underlying problems will keep resurfacing, driving Chrysler closer and closer to its demise. Recovery will require long term, intensive and painful therapy. Last time, Dr. Lee had the right prescription. This time, let’s hope Dr. Z can make the right decisions, and give Chrysler a chance to return to full mental acuity and maybe even a hit or two.