By on January 5, 2007

sign2222.jpgIn 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.

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106 Comments on “Chrysler Suicide Watch 5: Necessity is the Mother of Intervention...”


  • avatar
    Vega

    “incoherent farrago” that one really made me laugh…

  • avatar
    tom

    Frank, I think your idea is right, but taken too far.

    First of all, I totally agree on the online business and on your plan for the Jeep brand.

    I agree pretty much with your Chrysler plan, but I don’t see any problems for a next gen Crossfire or Pacifica, if they’re better implemented. Even the Aspen might work, if it would look like the Escalade and not like a pile of crap.

    Dodge you say should be the economic brand and I agree. But I think that especially an economic brand needs a car like the Avenger. This might even become their most important vehicle. I also don’t see why they should abort the Challenger and get rid of Viper, Nitro and Durango. I don’t think that those lines sink money, but especially Challenger and Viper bring people into the show rooms.

    The production of Nitros and Durangos has to slow down, but then I don’t see a problems with those two in general. There are still enough people out there to buy those cars. Next I don’t see why Magnum and Charger should be merged. I think it was very clever to make them into two seperate lines to not let a station wagon interfer with the Charger’s image and vice versa.

    Finally, I disagree on the Sprinter issue. I think the Sprinter has no business with Mercedes because North American buyers are not aware of the fact that Mercedes has traditionally also been a manufacturer of large commercial vehicles. In Europe people are used to that and are able to distinguish between Mercedes-Benz cars and Mercedes-Benz trucks & transporters. So I don’t see a better place then Dodge for the Sprinter to be sold.

    But I definately agree that Chrysler should bring in more diesel options, especially for Jeep and Dodge. And another extremely important thing that Dodge and especially Chrysler have to work on is their interiors. I mean that’s where the potential buyers spends most time in so in this day and age, it is inexcusable to offer the interiors the Big Three are producing.

  • avatar
    Rday

    Excellent and well thought out post. You hit the problem right on the head. Hopefully someone at DCX will read it and take it in.

  • avatar
    Dr. No

    Ain’t gonna happen, and shouldn’t. Dodge dealers do well because they offer trucks, and you want to limit them to “family transportation? It doesn’t have a chance in hell. The dealers will revolt faster than a Shiite in a Sunni neighborhood.

    Chrysler currently is the “family” brand among the three –why trade places with Dodge? Chrysler limps along because its lineup is anemic, save the 300c. The product is wrong, not the branding alignment.

    I do agree with the interiors. Have you seen the “Toys R Us” interior in the Charger? If the exterior doesn’t turn you off (as it should), surely the interior plastic will. Gawd, what drugs on these guys on anyway?

  • avatar
    Matthew Neundorf

    A couple of years ago DCX tried a similar realignment north of the border. Dodge was (other than Viper) trucks and vans alone, Chrysler handled all the car sales and Jeep was just Jeep. The experiment looked pretty good on paper but the 300 triplets put it to bed.

    The dealer network shrank (slightly) as a result of this but it didn’t solve anything. In fact it may have even turned Dodge customers away. A quick glance at the Downsview Airfield in Toronto will reveal that the entire field of un-movable (300 triplets) metal isn’t getting any smaller.

    The ability to build and buy online is only a matter of time away, and you’re right if DCX is smart they get there first.

  • avatar

    Jeep pickups were so popular before, I’m sure Jeep branded Dodge Rams would be just the ticket!
    /sarcasm

    Dodge should keep the truck line, Jeep should stick to Jeeps.

  • avatar
    JJ

    The first manufacturer to supply plausible diesel engines across the entire product line could have a huge (longlasting) benefit over the other ones.

    Just ask VAG. Audi supplied their first “100” in Europe with a TDI engine back in 1989 and still reap the benefits today. Eventhough Mercedes and BMW have matched or even slightly surpassed them technology-wise, Audi (and Vee Dubb) are still the ones that, in the eyes of many consumers, gave them the modern, economical, powerful diesel engine. TDI has (almost) become the equivalent of “diesel engine” just like Coca Cola has for…euhm…what was it again…oh yes…cola.

    So, you would say, who’s better cut out for this task than DaimlerChrysler? They’ve already got all the engines they need. Make some adjustments, call them Bluetec and that’s it…

    However, for Chrysler, it still won’t be a terminal solution for their problem. If they keep making the below average highly overlapping portfolio of cars they are now, even with diesel versions, it won’t be sufficient in the long(er) run. They should still drastically decide to cut some models and redesign others (like the review says, redesign the new Sebring, the current model will fail hopelessly).

    But at least diesel sales could proceed some money to make some necessary changes happen.

    I guess it’s up to Mercedes…

  • avatar

    Is this really Mark Knopfler, and is he in a Dodge Durango? Now DCX may be on the skids as you say, but MK’s latest offering with EmmyLou Harris (All the Road Running) is bang on the best thing he has done for years.

    I agree with you Frank that something radical must be done, and on your point that DCX has to stop looking for home runs and look more to singles and doubles. This is what wins the game in the end. Just look at T and Ho and even Hyun – with each iteration that gets consistently better.

    I think the Chryler brand needs some premium smallish vehicles in the Mazda and VW vein – and to kill the Chrysler minivans would be a way to free up dealer lot space.

    I agree with other comments that Dodge is the place to shop goods and people haulers and not neccesarily sedans or sports cars. Yet the Challenger just might fly off of lots (think Nascar fans) ala Mustang.

  • avatar

    While I don’t agree with everything Frank’s written, I agree completely that Chrysler should be making some fundamental changes in the way it does business.

    As we continue our coverage of The Big Two Point Five into the New Year, I find it astounding that none of the domestics are taking any big gambles with products or process. Does Chrysler really think they can keep on keeping on with what they’re doing and achieve anything like a different result?

    While many inside DCX will dismiss Frank’s suggestions out of hand, and provide a hundred reasons why you can’t simply kill models or chop dealers or, well, anything, there is no question whatsoever that the people in charge don’t “do” the vision thing.

    Vision is what’s needed. A clear, coherent vision for the entire company that’s immediately understandable to Chrysler, its dealers and customers. A clear vsion, (or, if you prefer, branding) makes every decision easier. Does the Aspen fit our vision of who we are and what we do? If it does, great. If it doesn’t, kill it.

    At the end of the proverbial day, companies are no different than people. You have to stand for something. THAT’S what Lee offered. Even though there plenty of hiccups in the execution of Lee’s vision, we knew where Chrysler stood.

    In any case, if not this, what? When you’re in a car careening towards a cliff, no matter how you got to that position, not taking immediate and dramatic evasive action is, indeed, suicidal.

    BTW: It’s always better to go too far than to not go far enough.

  • avatar
    Brian E

    How was Iacocca’s introduction of “radical new models” “draconian”? I think the word you were looking for is “desperate”.

    Allow me to echo tom’s comments: the measures proposed above have sensible ideas at their root but ultimately go too far.

  • avatar
    SherbornSean

    “Consumers have no problems buying books, clothing, and even groceries over the internet. Why should car shopping be any different?”

    Frank, I suggest you do your research. Automakers cannot sell directly to consumers because every state in the US has laws protecting their dealers, and outlawing direct sales.

    The diesel idea is a nice one, but is unlikely to succeed unless gas costs in the US what it costs in Europe.

    And the idea of kissing goodbye 400,000 in annual sales of the Ram sounds a lot like suicide. Ditto the Town & Country, the interior of which looks like a real winner from the released pix.

    But the Hemi-powered PT Cruiser, that sounds interesting.

  • avatar

    Uhmmm, why can’t we keep the viper? And yes, we do want
    hassle-free internet car purchasing!!

  • avatar
    jazbo123

    It’s a bit of a mystery how DCX has all the necessary ingredients to supply what the NA consumers want, yet can’t locate a chef that can find his way around the kitchen.

  • avatar

    “Don’t touch Ram.” “Don’t touch Jeep.” “Don’t touch Viper” “Don’t touch Challenger.” “Don’t touch Nitro/Pacifica/Crossfire/whatever.”  This is the kind of thinking that got Chrysler into the situation they’re in today.  As Mark Twain adroitly pointed out, “sacred cows make the best hamburger.”  Whatever Chrysler has been doing doesn’t work or they wouldn’t be going through the same problems all over again.  Unless DCX is willing to shake up the status quo, sacrifice a few sacred cows and make real strategic changes, whatever patches they apply now will just fall off in a few years and underneath nothing will have changed.     And so the cycle continues. Time to break that cycle.

  • avatar

    Frank, I suggest you do your research. Automakers cannot sell directly to consumers because every state in the US has laws protecting their dealers, and outlawing direct sales.

    Which is why closing the final deal and taking care of the paperwork would be done by a dealer – who would be reimbursed for his/her part of the process. But everything up to that point would be handled on line.

  • avatar
    ash78

    If Bluetec is marketed right, the powerplant will sell the car, so to speak. Just from trawling the web, I’m becoming aware of plenty of people who would jump at the first chance to get a diesel inside a decent midrange car (not truck) beyond the scope of VW. If DCX can be first-to-market with a wide range of Bluetec availability and pitch it mainstream, they stand to reap a lot of the benefits before Honda, VW, Toyota, and the rest catch up (Honda is right on their tails with passenger diesel, btw).

    The only dealers I can think of in our area sell Dodge-Chrysler-Jeep together, so those places would really stand to benefit from a more segmented layout like the article suggests.

    Also, I had no idea Mark Knopfler/Dire Straits were British. For 20 years I thought they were Yanks. Unfortunately for the rest of the article, that was the biggest revelation to me ;)

  • avatar
    windswords

    First off, good article Frank. I like the direction recent articles have taken. Instead of lamenting the state of the domestic auto industry the last few have tried to offer solutions to the problems. But I have to disagree with a few of your suggestions (hey what fun would this post be if liked all your ideas?).

    Chrysler’s problem in branding and division focus is directly a result of killing Plymouth. Plymouth was to be the “value” and “fun” brand for Chrysler selling alongside the upscale Chrysler brand. Dodge was to be performance and trucks. Jeep was to be off-road adventures and active lifestyles. And Eagle (remember them?) was to be the import fighter, offering a mix of vehicles from Mitsubishi and Chrysler that would appeal to import buyers (the original Chrysler 300M was supposed to be the 2nd generation Eagle Vision, it was made a Chrysler after the division was shut down, that’s why Chrysler had three 2nd generation LH cars, Concorde, LHS, and the 300M).

    History has shown that when you close a division, you do not increase the sales of your other remaining divisions, at least not to the point of making up for all those lost sales. This didn’t happen with Oldsmobile and it didn’t happen with Plymouth. Now GM has divisions to spare, Chrysler and Ford do not. The only way that closing Mercury makes sense is if you put Volvo’s in every Lincoln/Mercury dealer. But I thought the idea with Volvo was to keep it exclusive and separate from Ford and use their platforms for other Ford and Lincoln/Mercury products.

    The plan for Plymouth before they killed it was to keep it as the value division and to create fun retro vehicles like the Prowler and the PT Cruiser, which should never have been a Chrysler.

    So without it’s value/everyman brand Chrysler is in a pickle: How do create a platform for more than one division when your potential 2nd or 1st best selling division (Plymouth) has been axed and you are left with just 2 other ostensibly “exclusive” divisions? How can you make a car like Caliber and sell enough of them to keep your factory running at an efficient rate? Without Plymouth they chose to share the platform with Jeep, creating not one, but two cars, the Compass and the Patriot. Why did they create two cars instead of one? Because Jeep is a more exclusive brand. They don’t sell enough to cover the costs, so they create two models: one for women (Compass), and one for more traditional buyers (Patriot). Now they are diluting the Jeep brand.

    The same thing has happened to Dodge. Did they really need a Jeep Liberty (Nitro)? This muddies the waters about what Dodge is.

    The PT Cruiser does the same thing for Chrysler. I like the car but a sub 20 to low 20k car has no business being a Chrysler if the brand mission is to be an upscale alternative. And let’s not even talk about Chrysler’s “gingerbread ceiling”. It can’t go too far upscale because it intrudes on Mercedes turf, the uncontested queen bee of this nest. And you know what happens when someone tries usurp the queen bee, they get stung. That’s why the ME412 never saw the light of day and the Imperial concept never will either. The best the Chrysler division can hope for under this Reich is old generation Mercedes parts and mechanicals.

    Retreat is never a recipe for victory. I don’t think axing models (Magnum, Challenger), or getting out of an entire market segment (full size pickups) or other “consolidation” efforts are going to create sales or prosperity. Chrysler needs to bring back Plymouth. How they can do this I will save for another post (I think my boss wants me to do some work now).

  • avatar
    JJ

    Is this really Mark Knopfler, and is he in a Dodge Durango?

    Well, the first I wouldn’t know. Before my time. The second however, I do know.

    It’s not a Durango, it’s a BMW 7-Series. Notice the typical BMW confort seats headrest and the doorhandle. Also, if you look closely, you can see the Hofmeister kink next to the guy’s (Mark’s?) right ear.

    Yes, I’m a big fan of the “What car is this” pictures game. This one wasn’t that difficult though.

  • avatar
    SherbornSean

    Frank, selling direct is a nice idea, and has precedent in Europe, where some 40% of vehicles are ordered, but here in the US of A, its a no-go.

    Even if you got around the laws, dealers will hate it, because they make their money 2 ways: (1) upselling you on undercoating and “special” financing (‘just tell me what a successful guy like yourself can afford in a monthly payment and we’ll make it work for you’) and (2) maintenance and repairs, which are based on developing a customer relationship.

    If you take that away, the dealers revolt. The other issue is that for whatever reason, when Americans make the second most important purchase of their lives, they demand to see the product now and take immediate delivery. Bazaar but true.

    You want to completely revamp the sales process and realign the divisions and axe half the company’s sales all at the same time? I don’t suggest holding your breath waiting for Dr. Z to call on you to replace Tom LaSorda.

  • avatar
    Glenn A.

    How about a “truly radical” idea and badge all cars as Chrysler (“corporate brand” as well as marque), then name each line using historically significant names.

    What does Valiant bring to mind to those who remember?
    Reliable. Economical. Sturdy. Small-ish but comfortable. Perfect for a new compact. How about a simple rear-drive “compact” with a cast alloy torque tube drive on coils and 1/2 of a Hemi V8 under the hood, (slant 4 cylinder) plus 5 speed automatic standard and hydraulic hybrid optional. Dead cheap to manufacture with robots. Price it, with room for 4 in comfort, at $14,000 to $17,000. Make it one size larger than the competition in this price field, but no heavier (as in, no more than 2700 pounds). Pitched against Cobalts, Focus’s, Fits, the distinctly American look would at least be something different, and the rear wheel drive unique in the market.

    Plymouth? American (c’mon, it’s named after the Plymouth rock). Working and middle class. Sturdy. Inexpensive. Good performance. So, rear wheel drive mid-sized car, how about 3/4 of a Hemi V8 under the hood (vee six Hemi) plus rear indpendent suspension and 5 speed automatic and hydraulic hybrid optional. A cut-down Hemi V8 in a cut-down Chrysler 300. Price it, with room for 5 in comfort, at $17,000 to $21,000, and make it a few inches smaller than the 300 in length and trunk space.

    Yeah, bring back the Challenger but don’t expect big sales numbers.

    Forget the Chinese experiment. Lose the Ugly stick in styling department and the stupidity kool-aid in management and marketing. Get RID of the ugly-mobiles. Improve quality to f Toyota standards on all cars, no excluses. Improve interiors a LOT. Start thinking outside the box.

    None of this will happen of course. But ’tis fun to surmise.

  • avatar
    kasumi

    The internet idea would go along way to help Chrysler. Didn’t Saturn do somethin g similar? We bought our house and handled almost all of the transaction online – loan application, communications with realtor and mortgage company. Why can’t I do the same for a car and just sign the paperwork get the keys at the dealer?

    So many people dread the car sales experience. I assume most TTAC readers know exactly what they should pay, the options they want on their car before they walk into the dealer. When we bought our last new car (2004) we walked in with Edmunds info and internet advertisements from other dealers. Our salesperson, saw the Edmunds and the first offer was the Edmunds price. At the same time, the people next to us (purchasing the same car) didn’t have it and overpaid by $3000.

    Its not 1970 anymore, I don’t have to get a brochure to figure out what kind of engines are offered.

    K.

  • avatar
    windswords

    Dodge was not originally an “everyman” car line. As an historical note, the original Dodge Challenger was not built to compete with the Ford Mustang and the Chevrolet Camaro. That was the mission of the Plymouth Baracuda. It’s original intention was to go up against the Mercury Cougar. Again because Plymouth = everyman, just like Ford and Chevrolet. Dodge was to be more upscale, and originally offered more luxury features and had a luxury specific model – the R/T SE. When you look at the design details of the two cars, it bears this out. The Challenger had a 2 inch longer wheel base (110” vs 108” for the ‘cuda). The side crease in the sheetmetal was to give the car a more sophisticated European flair, as was the quad headlamps – the Plymouth had large dual headlamps and rounded body sides (interesting note – NONE of the sheetmetal between the two cars is compatible, not even the hoods, well maybe the trunk, I don’t remember, other than that one possible exception the windshield and backlight are interchangeble).

  • avatar
    tom

    Frank,
    I don’t think that the number of vehicles is the problem, but rather the quality. Toyota also offers the whole line up but somehow manages to do fine.
    Audi will double its line up by 2011 and I’m sure it’ll work out. With an intelligent platform strategy you can put out lots of vehicles that’ll appeal to different demographics without spending too much R&D money. Just stop with all the badge engineering like with the Caravan and Town & Country. If you want both makes to have a minivan, then at least make them look entirely different.

    A good example is Europe’s most successful car, the Volkswagen Golf/Rabbit. There are heaploads of cars on that platform: VW Golf, VW Golf Plus, VW Cross Golf Plus, VW Jetta, VW Eos, VW New Beetle, VW Touran, VW Scirocco, Audi A3, Audi TT, Seat Leon, Seat Toledo, Seat Altea, Skoda Octavia, Skoda Roomster.

    That’s already 15 different cars and I might have even forgotten some. But they are all very unique looking (Except maybe Golf Plus and Cross Golf Plus as well as Jetta and Golf).

    Drastic measures should be taken, but axing vehicles doesn’t help in most cases because if the formerly Big Three would axe every vehicle that doesn’t turn out to be profitable at some point, they would end up with no cars at all.

    Product quality and design is key as well as intelligent production to be able to adjust quickly to changes in demand.

  • avatar
    ash78

    Glenn A
    I normally like the idea of nostalgic naming for boutique or luxury brands, but I don’t think mainstream brands can pull it off, especially as they sell to younger people who came of age in the era of the K-Car. I don’t have any Chrysler/Plymouth/MOPAR memories except what my Uncle tells me about back in his drag-racing days. If you asked most people where the name Hemi came from, I think they would tell you Dodge invented in 5 years ago. As morbid as it sounds, if you market to people who remember a lot of those names, the remaining car-buying lifetime of that customer might be too short. Enough people are mad that the Charger has 4 doors, they should stop while they’re ahead. Ford brought back the Galaxy, though….as a minivan in Europe. Shark has been jumped!

    Plymouth? American (c’mon, it’s named after the Plymouth rock).
    Or a town at the mouth of the River Plym, Devon, England? ;)

  • avatar
    jazbo123

    Are Jersey cows also named after New Jersey ;)

  • avatar
    Glenn A.

    Hi ash78, I guess my point was – Chrysler should do something nobody else is doing, and capitalize on it’s strengths.

    A colleague of mine and I were talking yesterday about the “big 2.5” and he is a real car-guy, maybe 25 years old, about 1/2 my age.

    He says he doesn’t remember a day (in his adult life) that the big 2.5 wasn’t in dire straits financially. I said “hmmm, the US auto industry has ‘become Chrysler’ – one crisis after the other. 1953-1954, nearly bankrupted because it down-sized it’s cars when ‘big’ was just getting in. 1957-1958, due to absolutely abysmal quality (cars rusting out in 2 years? With a 3 year car-payment?! Quite obviously unacceptable). In 1962-1963 because the Plymouth and Dodge lines down-sized again, plus awful styling (copying the economy Valiant as the basis for styling of the main lines is the reverse of norm and the near demise of Chrysler in this era proves the point nicely). Then obviously in 1978-1979 Chrysler nearly went bust. Then, again, wasn’t it about 1990? And now.

    Likewise the US auto industry. But, I rethought my position.

    I think the entire US auto industry is – becoming ‘American Motors Corporation’. As in – not long for this world. Soon to be bought-up and morphed into nothing but a memory.

    Here look at this – it’s interesting and to the point, especially the part where the younger, higher educated public are “US car avoiders” (in other words, the demographics just exactly like 43 years ago, then called the “Mustangers” which carried Ford into profits for almost a decade).

    http://detnews.com/graphics/2007/0102jdpower.pdf

  • avatar
    mdanda

    Your advice is logical, but pure fantasy without some more insight into the politics and organizational aspects involved to implement the recommended change. The layers of complexity are staggering for even the simplest of plans.

  • avatar

    I don’t suggest holding your breath waiting for Dr. Z to call on you to replace Tom LaSorda.

    That’s ok by me. He’d probably try to make me stop writing for TTAC and that would be the deal breaker.

  • avatar

    mdanda:

    Which exactly why someone at the top of Chrysler needs to cut through that company like a scythe. Take no prisoners.

  • avatar
    ash78

    Glenn A
    Interesting read, thanks for the link. It’s funny how silly people can be in mentioning “poor fuel economy” for an entire nationality of vehicles (although the lowest median fuel economy is domestic, but I think that’s heavily influenced by trucks).

    But that’s further proof that capitalizing on Diesel’s efficiency and longevity could at least address the concerns of the “American avoiders”. Diesel is the primary reason I am a DCX shareholder (long term).

  • avatar
    jaje

    I halfway agree with the buying through the Internet. They could take a Saturn like no haggle pricing method. However – I would never just buy a car from reading reviews and will have made several trips to a brick / mortar dealer to actually test drive one and compare it to the other vehicle I’m cross shopping it against. That’s when I make my decision this is the vehicle I’m buying – then the hard part starts – negotiation pricing.

    I bought my last 2 “new” vehicles from the Internet Sales Dept at the local dealer. I shopped the price among 4 other local dealers (Edmunds “what other’s are paying”) and negotiated down the price at the dealer I liked the service best at and bought it there. I didn’t get bottom dollar but I got a very good deal and even negotiated the accessories and labor to install them (I set a basis of 10% of the cost of the part I could buy online). Taken my day job requires a lot of negotiation and compromise (besided being married) it works well if you find someone willing deal honestly with you. One thing I found is don’t be afraid to ask to talk to another salesperson if you don’t like the one you are dealing with. I wound up dealing with the manager after the initial Internet sales person was not working with me.

  • avatar
    SuperAROD

    Chrysler was up 4% last month after up 3% in Nov. ALL of their new product is doing well, including the "much hated by TTAC" Sebring and Compass. Sebring sales were up 125% last month. Over 12,000 units sold. That is a Top 15 car in just its second month of availability. Compass was up almost 50% over November. That doesn't even speak to Wrangler and Nitro which have a 100,000 order backlog, nor to Caliber which had another great month. Even Aspen had a good month. Patriot just started production in December and is considered a potential "star". Avenger due in a few months, along with Sebring convertible. New mini's just came out, they look to maintain DCX's dominance of the mini market. And read in the Det News that the infamous Sales bank is below 10K units now, and units and inventory is below 78 days, so the inventory situation is getting straightened out. I am predicting a 10% increase in sales in January. Mark my words. Any questions? Thanks for coming out.

  • avatar
    tom

    SuperAROD,

    while I don’t see it as positive as you do, I think the problem that many people here have is that they don’t see the difference between cars they don’t like and cars that don’t sell.

  • avatar
    BostonTeaParty

    Slightly off track but have you seen the concepts/new models Chrysler is throwing out (up) for the detroit show? the future is definately not bright. Their felt pen fairies need a good slap on their collective wrists! You could have a deathwatch dedicated just to that.

  • avatar
    SuperAROD

    The proof is in the pudding I always say. Sebring? Up 125%. Guess it is not such an abomination after all….

  • avatar
    ash78

    I have liked what I’ve seen of the new vans. Especially the turn-around middle seats, that is just cool. It’s so cool, it almost makes me want to have kids right now to justify the purchase. Almost. A Caravan with the 3.2 Bluetec would be the perfect long-distance highway cruiser.

  • avatar
    Dave M.

    Let’s put the Sebring sales increase in perspective. The old model had rotted on the vine, and how much of that increase was due to fleet sales?

    Sorry, but they’re hideous unless discounted heavily, then they’re just ugly.

    I do think Jeep should keep the Patriot, and develop a pick-up. And the 300 needs a wagon like in Europe.

  • avatar

    SuperAROD: Chrysler was up 4% last month after up 3% in Nov. Increased sales for one or two months do not indicate a recovery. According to leftlanenews: The Chrysler Group (Chrysler, Dodge Jeep) today reported that sales in December 2006 rose 1 percent to 190,415 units, compared to December 2005 sales of 189,449 units. For the entire year, Chrysler Group sales totaled 2,142,505 units, a decrease of 7 percent over 2005. I'll concede they're on the road to recovery when the monthly stats show consistent sales growth (more than just one or two months here and there) and the annual figures show steady growth.

  • avatar

    Month Sales DR % Vol %

    Model Curr Yr Pr Yr Change Change

    Sebring 12,157 5,634 124% 116%
    Concorde 0 0 0% 0%
    300 16,250 12,202 38% 33%
    Crossfire 10 1,054 -99% -99%
    PT Cruiser 8,215 10,167 -16% -19%
    Aspen 3,033 0 0% 0%
    Pacifica 5,297 7,228 -24% -27%
    Town & Country 10,877 15,923 -29% -32%

    CHRYSLER BRAND 55,839 52,208 11% 7%

    Compass 5,066 0 0% 0%
    Wrangler 8,623 5,363 67% 61%
    Liberty 11,979 17,665 -30% -32%
    Grand Cherokee 12,853 21,732 -39% -41%
    Commander 7,566 8,458 -7% -11%

    JEEP BRAND 46,087 53,218 -10% -13%

    Neon 0 4,378 -100% -100%
    Caliber 9,425 0 0% 0%
    Stratus 459 3,853 -88% -88%
    Intrepid 0 0 0% 0%
    Charger 10,567 7,137 54% 48%
    Viper 68 163 -57% -58%
    Magnum 2,735 2,901 -2% -6%
    Dakota 5,144 7,309 -27% -30%
    Ram P/U 32,875 30,978 10% 6%
    Caravan 14,095 19,039 -23% -26%
    Durango 4,322 6,415 -30% -33%
    Nitro 7,491 0 0% 0%
    Ram Van/Wagon 0 0 0% 0%
    Sprinter Van 1,308 1,850 -27% -29%

    DODGE BRAND 88,489 84,023 9% 5%

    TOTAL CHRYSLER GROUP 190,415 189,449 4% 1%

    TOTAL CG CAR 49,698 35,334 46% 41%
    TOTAL CG TRUCK 140,717 154,115 -5% -9%
    Selling Days 26 27
    Global Sales Reporting & Analysis
    January 3, 2007

    DaimlerChrysler Corporation U.S. Sales Summary Thru December 2006

    Sales CYTD DR % Vol %
    Model Curr Yr Pr Yr Change Change

    Sebring 69,357 90,294 -23% -23%
    Concorde 0 210 -100% -100%
    300 143,647 144,068 0% 0%
    Crossfire 8,216 14,665 -44% -44%
    PT Cruiser 138,650 133,740 4% 4%
    Aspen 7,656 0 0% 0%
    Pacifica 78,243 85,557 -8% -9%
    Town & Country 159,105 180,759 -12% -12%

    CHRYSLER BRAND 604,874 649,293 -7% -7%

    Compass 18,579 0 0% 0%
    Wrangler 80,271 79,017 2% 2%
    Liberty 133,557 166,883 -20% -20%
    Grand Cherokee 139,148 213,584 -35% -35%
    Commander 88,497 17,048 421% 419%

    JEEP BRAND 460,052 476,532 -3% -3%

    Neon 17,239 113,332 -85% -85%
    Caliber 92,224 0 0% 0%
    Stratus 51,393 99,648 -48% -48%
    Intrepid 0 298 -100% -100%
    Charger 114,201 44,804 156% 155%
    Viper 1,455 1,652 -12% -12%
    Magnum 40,095 52,487 -23% -24%
    Dakota 76,098 104,051 -27% -27%
    Ram P/U 364,177 400,543 -9% -9%
    Caravan 211,140 226,771 -7% -7%
    Durango 70,606 115,439 -39% -39%
    Nitro 16,990 0 0% 0%
    Ram Van/Wagon 0 405 -100% -100%
    Sprinter Van 21,961 19,578 13% 12%

    DODGE BRAND 1,077,579 1,179,008 -8% -9%

    TOTAL CHRYSLER GROUP 2,142,505 2,304,833 -7% -7%

    TOTAL CG CAR 510,234 526,823 -3% -3%
    TOTAL CG TRUCK 1,632,271 1,778,010 -8% -8%

    Selling Days 306 307
    Global Sales Reporting & Analysis
    January 3, 2007

  • avatar
    SuperAROD

    1% on volume, 4% adjusted. Less selling days in 06 than 05. Therefore 4%.

    Chrysler up 11%, Dodge up 10%. The only thing holding them back was a huge Dec 05 for Grand Cherokee, or else Jeep would have been up again as it has been for several months.

    Oh yes, let’s not forget 08 Liberty coming out next summer as well.

  • avatar
    William C Montgomery

    Frank,

    I agree wholeheartedly with the necessity for radical change at DCX. I would add emphasis in three areas. First, I think I would give greater weight to reforming the organized crime syndicate known as dealerships. The 5-star dealership designation must be an award for the most accomplished thieves. While manufacturers like Lexus, Honda, et. al., have learned that they can sell more cars if they provide an attractive buying and service experience, Chrysler/Dodge/Jeep dealers are mired in decades old model of car sales that features smarmy salesmen and rip-off service departments.

    Second, every Jeep (not just the Grand Cherokee) should come with a Blue Tech diesel engine. This should be more of a standard than and option. Blue Tech could become the HEMI of the next decade if it is done correctly. Jeeps, which favor big torque at low revs for jeeping, are the perfect place to make this inroad.

    Third, Chrysler and Dodge have carved out a niche are radically styled vehicles. But fashion is fickle and the company must continually redesign to stay on the cutting edge of the trends. Car manufacturers that design more conservatively can afford to take longer with redesigns and evolve stylistically. To keep sales hot, Chrysler must continually take design risks and not try to milk yesterday’s hits. Case and point: the warmed-over PT Cruiser. Too similar to the old model, which is out of vogue.

  • avatar
    ash78

    One other thing to note is this: What “fence-riding” potential diesel fan is going to jump in a Grand Cherokee Bluetec for only a couple mpg extra? (as the upcoming version offers)

    If you factor in that some places in the US have Diesel fuel sitting $0.25 or more above high-octane gas, that’s a losing proposition to many people on a cost basis. IMO, that’s a bad launch for a new engine brand if the mass media is touting “30% efficiency improvements” over gas engines. Anything short of that probably won’t win mainstream converts.

  • avatar
    SuperAROD

    Kix, BlueTec will be available in the 08 Cherokee as part of a product refresh. I think Commander will also have this option as well. I am also hearing rumors of BlueTec Wrangler.

    The Durango for sure is going to have a hybrid option in 08, and I think I read that the new minivans are going to have hybrid availability as well.

    Additionally it appears that DCX is trying to stick the 4.0L V-6 / 6 speed auto combination into every vehicle it can, and this is a pretty high economy V-6 we are talking about.

    Not to mention Compass, Caliber, Patriot with new 2.4L 4banger.

    DCX is a little late to the party but they are coming.

  • avatar
    barberoux

    Actually I bought a car using autobytel and only used the dealer to pick up the car and give them the check. I spent maybe an hour in the dealer and wasn’t bothered with hard sell tactics or loud plaids. It was a quick and easy technique plus I paid a decent price.

  • avatar
    Vandal

    I don’t understand what the deal is Chrysler and the Viper. I don’t see why that car should be eliminated, but at the same time Chrysler has made the thing almost impossible to sell. Anyone notice the many times Dodge has had a “sales event ” there is always a tiny asterix in the corner that says “excludes Viper”?

    One problem is people have to get past the mental thought of “paying 80 grand for a Dodge”, and unless anything has changed in the last few years, this is a car that only performs well in a straight line. For many if you have that kinda money to spend on a sporty car you’re going with something along the lines of BMW M series, Mercedes AMG, or Porsche.

    What does the Viper have that justifies its rediculous price tag?

    If Chrysler would put out a 35 grand version with a 500HP V8 they would actually have something to sell to muscle car crowd since GM dropped the ball.

  • avatar
    ash78

    Viper has “look at me!” factor. That’s something in most metro areas that you just don’t get with an M, 911, or AMG, no matter how fancy. Not even with a Vette–they’re just too common.

  • avatar
    JJ

    And the 300 needs a wagon like in Europe.

    Except that that’s already sold in America, under the name Dodge Magnum, if I’m not mistaken. Only differences are the front end and the dashboard.

    I think the 300C Touring looks better than the Magnum, but then again, if they would offer it in the US, it would be yet another two nearly identical cars with a different badge on them. I don’t think that’s what they need right now :). Killing off the Magnum would be an idea.

    There is one thing though, the 300C (Touring) IS available with the Mercedes V6 CDI (though not yet Bluetec) engine in Europe AND AWD.

    Unfortunately the 300Cs are significantly more expensive over here too…(Yes, the Dollar is low, but I think it’s built in Austria + *sigh* taxes…)

  • avatar
    KixStart

    SuperAROD, I remember some review of the ’05 or ’06 Jeep Liberty with a CRD. The fuel economy in that struck me as disappointing. When DCX brings the new diesels out, I hope they get notably better fuel economy. A friend tells me that the Liberty diesel has been withdrawn. Disappointing sales, maybe due to indifferent fuel economy, or did it not make pollution control numbers? I’d like to see the Big 2.5 make some hits with new engine tech.

    Also, why wait for a model refresh to introduce a new engine? Why not have a new engine be a model refresh all its own? Of course, it may be that the engine’s not ready until then but an ad that unveils the “new” Cherokee and – voila’ it’s the same old Cherokee but all the differences are under the hood might spark some interest, too. Well, Iacocca could pull off such a stunt (I can imagine him whipping the sheet off the “new” car, listening to groans of disappointment and then smiling and popping the hood to show us what’s new) but Dr. Z? Probably not.

    Toyota “refreshed” the Rav4 in 2004 (Gen 1 in 1996, Gen 2 in 2001, Gen 2.5 in 2004, Gen 3 in 2006) with a new engine. They may have put in a few other, minor mods but the engine was the star of that show.

  • avatar
    rodster205

    Granted I’m a little biased, but judging by the numbers above the Commander does have a place in the lineup. There are easily 10 models it outsells.

    Having driven both the Commander and the Grand Cherokee extensively I can’t see any justification for buying a GC over a Commander other than styling and (barely) price. With the exception of the SRT8 you get the same chassis, footprint, engine/trans/drivetrain options, etc. in the Commander and more interior room and the “in case of emergency” 3rd row.

    The 08 Liberty will have ‘mini-Commander’ styling and so does the Patriot, with a Wrangler-ish grille. So it looks like the styling direction is going in the direction of a Wrangler/Commander mix. If that’s the case the GC will be the odd man out. It is only slightly larger inside than the Liberty (even less with 08) and if they mirror the styling then what’s the point? I guess we’ll find out in ’10 or ’11. Anyone know when the next big GC update is?

  • avatar
    SuperAROD

    “If Chrysler would put out a 35 grand version with a 500HP V8 they would actually have something to sell to muscle car crowd since GM dropped the ball. ”

    That would be the 2008 Challenger, would it not?

    KixStart, the engine in the CRD Liberty did not meet the new 07 emission standards for low sulfur diesel. The Blue Tec is going to meet those standards in like 45 of 50 states and they are trying to meet the ridiculous standards of the other 5. I was disappointed when they dropped CRD Liberty as well. I think the timing of the deal just worked out that the new BlueTec wouldn’t be available until summer 07 for the refreshed Jeeps.

  • avatar
    SuperAROD

    “Anyone know when the next big GC update is? ”

    Did you see the TrailHawk concept photos last week? It will be at the Detroit auto show next week. This has a good chance of being the next CG.

    http://www.allpar.com/cars/concepts/jeep/trailhawk.html

    Plus as stated earlier, the GC will be refreshed both inside and out for 08.

    http://www.wkjeeps.com/wk_updates.htm

  • avatar
    Vandal

    If Chrysler would put out a 35 grand version with a 500HP V8 they would actually have something to sell to muscle car crowd since GM dropped the ball.

    What are you smoking?

    Ya, I know it’s crazy to suggest butching up the Viper into another generic muscle car. However DCX does need some to do something radical, and I don’t see how the Viper is going to survive if sales numbers should drop below 1000 units a years. The Charger just isn’t winning over the GM muscle car customers sitting on the fence for the long delayed next Camaro. One problem is the Charger only comes with automatic transmission…what gives with that?

  • avatar
    86er

    The Charger just isn’t winning over the GM muscle car customers

    It’s starting to win me over. Not on account of waiting for the Camaro, however, but some sporty iteration of the Impala for 2009. I know GM has it in them to make the LX cars look like gimmicky plastic nonsense, but the siren song of RWD, good power and handling is luring me over. ’09 can’t come soon enough.

  • avatar
    cheezeweggie

    I agree with ASH78’s comments concerning diesels. I for one would not consider paying a premium for a diesel only to pay an outrageous price for the fuel. Besides, it will take more than a diesel option to save Chrysler. It’s the quality, stupid. My POS 93 Dakota convinced me very quickly to not even consider a Chrysler product regardless of engine options or innovative designs.

  • avatar
    nweaver

    A few comments:

    Having the Magnum as a separate label doesn’t hurt either it or the charger. Yet having a 300 wagon wouldn’t work in the states, US people generally don’t buy wagons (the Magnum being an exception)

    Pickups should still be Dodge, not Jeep, moving the pickups would hurt both.

    And finally, if Mercedes is generous enough to keep giving Dodge the Sprinter, dodge should keep selling it. Its a GREAT work truck, sells for a real premium price, yet badging it as a mercedes in teh US would hurt Mercedes without increasing sales or profits.

    The number of FedEx Sprinters you see on the road is impressive.

  • avatar
    nweaver

    As for internet sales, you already have that, just decentralized.

    I’ve had much success, both for myself and as advice to relatives, to just email a bunch of dealers with a request for OTD quotes on the vehicles I want, to the exact specs I want.

    Usually there is one or two dealers in the area who have a non scummy person running Internet sales, and they get a quick and painless sale when they respond with a quote.

    I figure I spent about $500 over the “You got the best deal possible OMFG” on the Mazda6 I bought. But the one I got was trucked up from Long Beach to the EXACT specs I wanted, from the manual transmission with V6, to the color, to the hatchback body style, to the light interior, all of which made a very unique-on-the-market car. (There was only ONE car to this spec in ANY dealer’s inventory. The dealer I dealt with trucked it up for me, and I figure the $500 premium basically paid for the extra shipping).

  • avatar
    Paul Niedermeyer

    Blue-tec diesels are costing the manufacturers $2-3K more than a conventional gas engine (more if imported with weak dollar). MB can afford to charge only $1k more for CAFE reasons on the E320 CDI, but Chrysler won’t be able to absorb that on their lower cost cars.

    With diesel running well above premium out here in the west, the economics don’t work. I like the idea of diesels, but the economics of gas hybrids, whose costs are coming down, are looking better.

    Regarding Chryslers “free hemi”: the pushrod/iron hemi costs substantially less to build than the old 5.9 it replaced, and undoubtedly less than the OHC 4.7 V8, and likely less than even the DOHC V6’s. They’re only giving up the premium they charged for those that would have paid extra for it, and saving money by giving it “free” to the rest.

  • avatar
    ash78

    Paul Niedermeyer
    I know the 320 Bluetec is European for now, but I understand the new 420 will be built here in Alabama for the GL/ML/R-class applications. I believe most manufacturers work pretty hard to hedge/distribute currency cost across the product lines, so one vehicle doesn’t creep up in price because of its specific build location.

    nweaver
    When I sold cars, I both loved and hated internet (pre-)sales. On one hand, it’s nice to have someone come in the door, sit down, sign papers, and be done within an hour–no rapport-building, no hassles.

    On the other hand, you lose almost all opportunity for soft sells (extended warranty!) because their minds are made up and the check is often written. Then managment wants to know why your percentage of warranties sold is down, and you can’t just say “I had a bunch of internet sales” and call it an excuse. I HATE dealers, far more now that I’ve been on the other side. 6 months was all I could take, thank God I found a real job to replace it.

  • avatar
    William C Montgomery

    KixStart: A friend tells me that the Liberty diesel has been withdrawn. Disappointing sales, maybe due to indifferent fuel economy, or did it not make pollution control numbers?

    Actually the diesel Liberty’s were a greater hit than DCX was prepared for. DCX planned to sell about 6,000 during the first year. They sold that many in the first 4-6 months. They would have sold more if the supply from the engine vendor was better. Jeep pulled the plug on the Liberty CRD project after the ’05 model year because the old oil burner would not meet newer EPA standards and, from what I heard, it was not cost effective to upgrade the Italian-built engines. Besides, that engine was rough running compared to the more refined diesel power plants in the Mercedes pipeline.

    Based on what I read on the Liberty owner’s forum, real life gas mileage of the Liberty CRD is in the mid-twenty miles per gallon compared to mid-teens for the 3.7L gasser. The rumor (hope) is that a Blue Tech engine will be announced for the redesigned ‘08 Liberty’s.

  • avatar
    Paul Niedermeyer

    ash78: the premium ($2-3K) of blue-tec diesels I mentioned is not currency related, it’s the actual higher cost to manufacture. Diesels have always cost more to produce, and the blue-tec technologies are very complicated and expensive. What I said was that it might be even more than that because of currency issues. Clean diesels have a similar intrinsic cost premium to gas hybrids.

  • avatar

    More Diesels? YES!

    Oddly enough, I think one of the problems with selling Diesel engines is banishing some long-held biases that people have inherited from gasoline biases. Diesels are all about torque and there have never been “Torque Wars” like we’ve seen HP wars. You can get more from less in a Diesel. The Jeep Liberty is a great example. The CRD engine offered in the Liberty was a inline four cylinder. Petrol-heads don’t consider a 4-banger a “real” engine, but anyone who knows Diesel understands that number of cylinders isn’t the criteria to look at.

    Internet Sales Channel option for consumers? YES! You know, screw the dealers. It is about time those rapacious dinosaurs face extinction. Legislation in the way? Rewrite it. Dealers make buying a car the most unpleasant experience possible. A “dealership” should be nothing more than a service & delivery outlet. Sack the entire sales staff and hand them over to the time-share industry where their skills can continue to provide potential customers with pain forever.

    If I never had to step foot in a dealership again for the rest of my life, I’d be a happy man.

    JJ, if you like the “guess the car” game, click on over to my blog… it is a long running feature. Mostly of unusual stuff I have encountered while vintage rallying, so there can be some really obscure stuff there.

    –chuck

  • avatar
    ash78

    Paul Niedermeyer
    I was making reference to your parenthetical comment about the weak dollar, not the overall comment. Sorry for confusion.

  • avatar
    windswords

    In an earlier post I stated why I thought it was a mistake to discontinue Plymouth and how that had adversely impacted the Chrysler Group as a whole. Here is how I would go about bringing Plymouth back.

    The return of Plymouth

    Phase 1 – Re-introduce a few exclusive models as a sort of “nostalgia” or “boutique” brand.

    Rules for Phase 1: Build in a limited number. Do not offer rebates. If a few are left over at the end of the model year, offer the dealers a discount which they can pass on to the customers (ala the imports) but do not, put “cash on the hood”. Ever. If there are still a few left after that buy them back and destroy them. If you don’t build many of them you should have little or none left over. If the public demand exceeds the supply so be it. At this stage you do not want to over produce and you want to build exclusivity to create brand “buzz”. Also if the venture fails, you only built a few thousand units that you can’t sell instead of tens of thousands trying to re-launch the brand. During this time market studies should be made as to what potential customers would want in a future Plymouth.

    A good place to start with Phase 1 would be a version of the upcoming Challenger. The Barracuda is fondly remembered and a limited run of these would have an instant appeal. In this case badge engineering would make sense. Just change enough in the design ques so that people recognize it as Barracuda. I have already seen drawings and renderings of such a car on the web and in magazines. Next would be a Fury or Grand Fury version of the LY platform. This would be a “value” vehicle de-contented as much as possible from the 300C. Simply use the 80/20 rule. Keep the 20% of the features that 80% of the customers want. A/C, good stereo, ALL the safety features. Forget leather, extra sound deadening, auto dimming mirrors, auto windshield wipers, navigation, and the Hemi. Make it a roomy automobile at a good price.

    Phase 2 – Take the boutique brand mainstream. If there is going to be a next gen PT Cruiser put it back as Plymouth where it belongs. Reintroduce the Voyager minivan. If you must make a Town & Country then keep it as a long wheel base only. Voyager should be primarily short wheel base and no AWD option. Economy car: decide which make gets a hatch and/or wagon and which gets sedan. So Plymouth will have one version and Dodge the other. If and when Plymouth gets back to having a C, D, and E segment car in their line up make these the fleet/rental units. You can still offer Chryslers, Jeeps, and Dodges to rentals but only in limited numbers, just like you can rent BMW, Volvo, etc. Not enough to hurt the image or resale values. When a traveler rents a DCX mainstream non-premium rental it will be a Plymouth.

    Rules for Phase 2: No trucks (I don’t consider a minivan a truck), no SUV’s, and no luxury. Sporty, fun, and retro allowed. All safety features should be standard, except for the latest technological developments. These should have every type of airbag, stability control, ABS, and traction control. Families should be a primary market. Give dealers a choice on which brands to offer: Jeep/Chrysler/Plymouth, or Jeep/Chrysler, or Chrysler/Plymouth, or Jeep/Plymouth. This way a dealer could tailor his products to his local market. Why would a dealer in a rural area want to carry Chrysler when his customers want trucks, off-road, and value vehicles? Why would a dealer in a larger metro area with limited floor space want to sell low cost Plymouths when his upscale clientele want to buy $40k Jeeps and $37k Chryslers? Obviously most would want to carry all three, but this would give some a better chance at matching their market conditions.

    If things do not go well in Phase 1 you can quit at that point without wasting hundreds of millions of dollars on a hopeless cause. If Phase 1 is successful you go to Phase 2. If Phase 2 is unsuccessful then you return to Phase 1.

  • avatar
    Glenn A.

    Mark my words, all you diesel-philes. Sorry to be the bad-news bear, but diesels are NOT going to catch on in the United States.

    Let me give you a few reasons why.

    1) the $2-3000 manufacturing premium is going to be supplemented by a falling dollar value vs. the Euro (where the engines originate), so the real premium (not including DCX swallowing some of the differential as a loss on every diesel vehicle sold) will be more than $3000 by the time the vehicles go on sale.

    2) Diesel fuel costs as much as 50 cents more a gallon than regular fuel, at least in northwestern Michigan (and from what I can gather, a lot of other places in the US, too).

    3) Buyers have long memories. GM’s horrendous V8 (and V6) diesels from the 1980’s have sullied the diesel engine name in the United States for another 20 years, as a guess.

    4) Yep, some euro-phile VW, Audi and Mercedes owners and a few ex-Peugeot owners as well as a few thousand Jeep cartoon – whoops I mean Liberty – buyers ‘love’ their diesels. Guess what? It isn’t going to translate into a big profit maker for DCX’s car lines. VW diesel-philes buy VWs. Not Dodge Calibers with a (VW?) diesel.

    5) People (such as myself, once a diesel-phile) sitting behind Dodge monster pick-ups in traffic with stove sized exhaust pipes from their Cummins sixes are increasingly disgusted with the amount of air pollution (visible and odorous) coming from these vehicles, not to mention the noise pollution. Such people will RUN AWAY from anything diesel.

    Finally, 6) Hybrid technology, whether electric or hybrid, and direct gasoline injection are closing the cost and efficiency gap with diesels.

    Toyota, for example, plan to have a 2009 Prius with 1.8 liters, supercharger (instead of 1.5 liters), cut the price differential between Prius and ‘conventional cars’ in half (to about $1500), and the car is going to be apparently good for 95 real world MPG (possibly due to a Lithium Ion battery?)

    Diesel engines have not improved as much as that in 110 years.

  • avatar
    rottenbob

    Frank, I think you’ve got the general idea right. But you’re going a little overboard with cutting models.

    First of all, when it is done right badgineering is a GOOD thing. It costs a lot of money to develop a vehicle, but only a bit more to design a second skin for the vehicle. By offering two different vehicles you can cover more of the market and achieve more sales. Badgineering is only bad if the vehicles are too similar (i.e. Dodge Aries and Plymouth Reliant). But if you are going to sell a minivan, why not offer a basic family version and an upscale version?

    Plymouth should be revived as the value/family brand, Dodge should be designated as the performance/masculine brand, Jeep should remain the recreation and outdoors brand, and Chrysler should be the upscale brand.

    Badgineering should occur as such: Three minivans should be offered; a vanilla-styled for Plymouth, an aggressive-styled for Dodge, and a classic/luxury styled minivan for Chrysler. Pickups should be sold by both Dodge and Jeep; the Dodge versions will have modern/aggressive styling, the Jeep versions will have traditional/rugged/outdoorsy styling. And so on and so forth. You get the idea.

    Badgineering is really the key for a company as large as Chrysler to be profitable. They just have to be smart about it. I agree that the current and forthcoming Caravan and Town & Country look too similar. But the Jeep Patriot and Dodge Caliber share the GS platform and most people would not guess it. If they can properly manage badgineering they’ll see more sales, and the consumer will have more choice.

  • avatar
    William C Montgomery

    Glen A: Diesel engines have not improved as much as that in 110 years.

    What do you mean, they have not improved? Now they burn oil rather than powdered coal. That’s improvement.

  • avatar
    SherbornSean

    Glenn A,
    I know you’re a history buff, so I think you’ll appreciate 2 facts.

    1. the first diesel ran on peanut oil, AKA biofuels. If we are to cut our dependency on oil from unfriendly non-democracies, (bio)diesel is an important ally

    2. the first hybrid was developed 100 years ago by some guy named Porsche. Yes, that guy named Porsche.

    I would say that diesels and hybrids have both come a long way over the last century, and look forward to further advances from both and from the combination in the years to come.

  • avatar
    Paul Niedermeyer

    Glenn A: I’ve responded to your innacurate 95mpg claim for the next Prius before, but here goes one more time: That 95mpg number is based on a very non-real world Japanese testing standard, and that 95 mpg is only about a 12% improvement the current Prius gets on that test. Toyota has said the new Prius’ goal is a 20% improvement; if they can achieve that, it’ll be quite an accomplishment.

    The clean diesel/hybrid “competition” will be interesting to watch.

  • avatar
    ash78

    Glenn A
    See my comment above about the new V8 Bluetecs being built in the states. That at least helps reduce currency issues somewhat.

    New passenger-car diesels with ULSD do not smell or soot anything like the low-tech Cummins monsters they put in trucks. I hate being stuck behind those things, too.

    Rudolf invented the thing to run on peanut oil (for farmers). It just happened that petro-diesel became cheaper and easier for widespread distribution. Now there are all kinds of alternatives, one or more of which may prove feasible. For example, Tyson (chicken) is currently contracting to sell chicken fat for a huge discount to soybean oil, and there are a handful of companies that can successfully and profitably (after gov’t rebates) producing diesel from that.

    Again, I still can’t explain why some places face high Diesel fuel prices…I haven’t seen it more than $0.15 above premium ever. Before Katrina, it was roughly = midgrade gas.

  • avatar
    mdanda

    After negotiating my latest car purchase, it took 3 people to close the deal. 3 people!!! All in the dealership!!! Each getting a cut!!! After the price was negotiated!! That’s a lot of employees to support.

    Going to an Internet-based model will result in a lot of jobs lost. It would be career suicide for a DCX manager to propose trimming that fat.

  • avatar
    Paul Niedermeyer

    Rudolf Diesel invented his engine to run on coal dust. The explosions were so violent, that it repeatedly damaged the internal components that were then designed for very low compression ratio (4:1) gasoline engines. He switched to peanut oil not because of farmers, but because he needed to try something else that was more controllable. “Diesel” fuel had not yet been invented/commonly available.

  • avatar
    ash78

    Interesting, Paul. I had read the peanut oil account in a couple places, but never knew about the coal dust origins. The Germans have never ceased to amaze me with their alternative fuel engineering.

  • avatar
    SherbornSean

    Yeah, Paul, thanks for clarifying.

    It’s interesting that we are coming full circle — turning to biofuels for internal combustion cars and coal to run plug-in hybrids. All I know is that the quicker we develop alternatives to dinojuice, the fewer soldiers will be lost.

  • avatar
    JJ

    JJ, if you like the “guess the car” game, click on over to my blog… it is a long running feature. Mostly of unusual stuff I have encountered while vintage rallying, so there can be some really obscure stuff there.

    Some obscure stuff indeed. I only recognized the D-Type (which was already identified) and the Porsche 904 GTS (at least I think that’s it).

    I guess it’s also a bit before my time. I’m 21, so although cars for me start with the likes of the Miura and 275GTB or DB4 GT Zagato you see in magazines or musea, I can’t keep all the creations from that time of disgruntled went dissident Ferrari (though Enzo of course, also once was an Alfa Romeo engineer) designers fully apart.

    A Jeep Compass, however, I could recognise from a door handle picture. Or at least the unequal spaces between the various sheet metal parts.

    Which is another reason for DCX to make some better cars.

  • avatar
    BimmerHead

    While I do think that Diesel is a viable option, providing nice torque characteristics and gas mileage, I’m still not convinced that Americans are ready.

    As evidence, I’ll point to the short lived Jeep Liberty Diesel. Perhaps this was a poor implementation, or poor marketing… I’m not sure… It came and went so quickly it’s hard to know.

    There certainly appears to be an enthusiast contingent salivating for Diesels, but the general public seems less… uh… enthused.

  • avatar
    CliffG

    1. Internet sales: If you want to sell to the new generations coming up, you better have a presence there. I bought my last $20k+ car off Ebay, and I know many who do all of their used car shopping there. The number of people who enjoy car shopping at dealerships is a smaller and smaller number every year.
    2. As with the Mercury article yesterday, one has to wonder when a corp. will finally figure out that half measures will just get you out of business slower, but the end result is not going to change.
    3. The new Wrangler shows that C can do some things very well, why not concentrate on what you do best? And forget the rest!

  • avatar

    Well here is a datapoint for the anti-Diesel crowd to ponder: Econ101.

    I bought a Jetta TDI in late 2002 for $17k… all inclusive. Walked into a dealer, picked a car that had been sitting on the lot for a few months, made an offer, wrote a check, drove away. At that time Diesel’s were an oddball with practically zero demand.

    Insert one gigantic gas price hike, and presto!

    I see TDI’s are now fetching close to 2x what I paid almost five years ago. There are waiting lists for TDIs now.

    Clearly there is a market here!

    –chuck

  • avatar
    Glenn A.

    Biofuels are a great answer to what we need. But having nanny gov-mint making all the wrong choices based on outdated information, bad information, and how much money they get for their next election is all bad for every one of us except them.

    Example: the ethanol push and tax breaks given for this uneconomical fuel. Idiotic. It has so much less energy per gallon compared to gasoline and Butanol – it is a LOUSY choice for a motor fuel. Can’t be sent through pipelines as can oil or Butanol. Butanol is a 4-carbon chain alcohol, can be made from the same things as ethanol (see http://www.butanol.com) and contains nearasdamnit the same BTUs as gasoline. Now that most gas stations in my area have E10, my wife’s Sonata V6 has plummeted from about 22 miles per gallon to – God only knows what. Let’s just say we used to get 80 to 100 miles before the tank showed 3/4, now it was 50 miles, okay? And yeah, the car was just serviced and on the diagnostic computer 3 weeks ago, thanks. (Every single car I’ve owned and tested E10 in since 1979, has shown a significant drop in MPG – almost always more than the 10% ethanol content – i.e. we’re just wasting it, folks). Now, ethanol MAY make sense in an ETHANOL ONLY car….
    Now, the British are building Butanol plants in East Anglia, but in the US we no plants so far…. why? Politics.

    Example: We AREN’T making oil (more or less a drop-in replacement for diesel fuel, also can be cracked and made into gasoline) from garbage, offal or sewage. (See http://www.changingworldtech.com) on a large scale, only have one plant working in Carthage, Missouri. Why? Politics.
    The Irish are buying into this technology in a big way, apparently.

    Let the marketplace decide what fuels we adopt. Otherwise, aren’t we following in the footsteps of the failed Soviet system with 5-year plans and centralized planning? Answer: Yes. And look where it got THEM.

    Rant over.

  • avatar
    ash78

    I think the CRD Liberty’s biggest fault was, as mentioned, lack of promotion and MEGA-underproduction. Piss-poor demand planning.

    It’s not that the general car-buying public “isn’t ready for Diesel” (as I keep hearing), it’s that they just don’t know anything yet. This is where DCX stands to hit a home run, or just underproduce, underpromote, and fail. The diesel market is theirs to lose.

    Glenn A
    The Brits also have autogas at the pump in many places (LPG/Propane), which is quite a bit more economical–and much cleaner–than gasoline on a per-mile basis. Conversions run about $2,000, but IIRC, you then have to pay the EPA for a one-off test unless it’s a fleet vehicle. I believe that’s the reason you don’t see conversion shops here in the US.

  • avatar
    starlightmica

    The diesel market is theirs [DCX] to lose.

    And Honda supposed to introduce theirs in a couple of years, so had better get moving. We’ll see if their urea-less catalyst will be the CVCC for the next decade.

  • avatar
    ash78

    You’d better believe I’ll be first in line for an Acura TSX diesel wagon for my wife.

  • avatar
    jerseydevil

    yeah my mpg is down since e10, too, from around 32mpg to about 30, still not bad.

  • avatar
    jkross22

    Maybe I’m too much of a simpleton, but it wouldn’t seem to matter if Chrysler had 19 divisions if they made great cars and trucks, right?
    I agree with whoever said closing Plymouth and Oldsmobile didn’t increase sales for the other divisions. That’s because closing those brands didn’t make the parent company’s products better.
    These guys seemingly haven’t learned that when you build a desired car (300), you simply emulate what was most desirable and imbue those characteristics on other models. Instead, they offer up the Sebring.
    Nice job, guys. Dolts.

  • avatar
    jkross22

    There was a recent article in the WSJ recommending a hybrid car be created that can be plugged in at night that would charge batteries enough to provide a 20 mile range.
    Since most of us drive less than 20 miles/day, we’d rely on electricity for most driving needs. If you drive more than 20 miles, the gas tank and motor kick in and operate as normal. Since the battery would be charged at night when there is less demand for power, the cost of charging the battery is reduced.
    Difference in cost?
    Electricity would cost .03/mile, while gasoline costs .10/mile.
    Hmmmmm….

  • avatar
    EJ

    Count on diesel fuel to stay relatively expensive in the USA.

    The infrastructure of the oil refineries would have to be drastically changed to produce diesel instead of gasoline. Europe is already switching from gasoline to diesel and as a result European refineries are exporting surplus gasoline to the US. That only works if the US stays on gasoline.

    Diesel is popular in Europe because of government tax incentives over there, not because the free market necessarily prefers diesel.

    Besides, have you heard of any reasonable diesel technology that can match hybrid gas-electric emissions? I haven’t.

  • avatar
    wsn

    Chrysler is about THE most stupid car maker that I know of.

    Proof: Go on dodge.ca and try to find the curb weight (or length) of the Dodge Caliber.

  • avatar
    Robert Schwartz

    I think the issue here is that German management must decide whether they want to take a $10B write off or not. If they don’t, they will need to invest MB technology in Chrysler.

    The picture of MB that Americans have is distorted. In the rest of the world MB sells trucks and taxicabs along with $100K autobahn cruisers. Chrysler is the marketing channel they can use in the US to broaden their penetration of the American market without sacrificing MB’s niche image.

    I am all for narrowing the focus of the Chrysler brands. Clearly they are making more cars than they can sell, and they should stop that. Partly their problem is continuing to invest in badge engineering rather than facing the need to cut back on unprofitable lines.

    Here are my suggestions:

    First, one technology that MB has over other US companies is diesel. They should spread it around. There are no car models, other than high-end sedans and sports cars, that could not benefit from diesel.

    For Dodge. Forget passenger vehicles for middle class people. The Sprinter van has been a tremendous hit. A real example of what I am advocating. More Sprinters, forget the Magnum, Charger, etc.

    For Chrysler. No more front drivers, no trucks, no SUVs. Do what you did with the 300 in using MB E underpinnings, for a compact sedan based on the MB C (call it the Airflow) and for a large sedan based on the MB S (call it the Imperial). The Airflow and the Imperial do not need the electronic gizmos that clutter the MBs. They can use Chrysler Motors like the Hemi, and their new 2.4L 4. The whole Chrysler line should be the Airflow, the 300 and the Imperial. Forget the trucks and the SUVs. If they customer wants those they should be sent to Dodge or Jeep.

    Jeep. All Jeeps must be trail rated, true 4WD SUVs. This is the division that needs MB tech the least, although diesel is very logical for SUVs.

  • avatar
    Terry Parkhurst

    While I agree that the technology behind the “Hemi” should become standard fare to the entire Chrysler line, I disagree with the idea of aborting the Dodge Challenger. Despite the fact that the original car had some serious quality control problems – at least, based on one a pal of mine bought back in 1970 – the Challenger has become a hot ticket, not only at auctions, but with young motoring enthusiasts who weren’t even born when the first generation of Challengers were on the road. Bringing a new one back, won’t turn all the red ink into black; but it will help make Chrysler look like a winner again. There’s a lot to be said for successfully re-establishing a heritage. The (BMW) Mini sure shows that – bigtime. Admittedly, it could go badly for Chrysler; however, I don’t think, from what I have read and seen, that the new Challenger will follow the same sorry path that Ford’s attempt to bring back the two-seat Thunderbird did. The Thunderbird always seemed to appeal to mostly guys in their late 50s and early 60s – people who were perhaps in high school or middle school, when the car was first brought out in 1955-’57. The Challenger appeals to a much broader demographic. It amazes me, frankly.
    As far as duplication in the Chrysler ranks, that’s true enough. But all those cars, trucks and SUVs represent jobs. That’s why Senator Joe Biden was at the opening of a Durango plant in his home state, two years ago. It’s a hard sell to close plants such as those, as we slide towards another presidential election. (I know, I know, the new guy at Ford did it; so why not Chrysler? I have no easy answer for that.)
    As far as Lee Iaccoca, the man got out-of-touch with the market, as times changed. I can remember seeing 1992 Chrysler New Yorkers with button-tuft upholstery at dealer auctions in late ’92 and early ’93, (when I made some money, driving cars through those auctions). Most dealers didn’t want to touch the things, and if they bought, a (selling) dealer lost money; since no one was willing to pay much, since it would be so hard to turn them over. I used to wonder, “Who authorized such dated crap?” Then, I read Brock Yates book, “The Critical Path,” and learned it was Mr. Iaccoca. That’s why Chrysler, at the end, really wanted him to go, as fast as they could retire him; and also, why they didn’t want to take his offer to return, later in that decade.

  • avatar
    windswords

    Robert, et. al.:

    All you have to do is look at sales figures to realize your ideas of, I’ll call it brand consolidation are off the mark. Someone here said that Dodge should get out of pickups. That’s 400,000 units, and I’m not even talking about the Dakota, just the Ram. Robert said that Dodge should forget passenger vehicles – the Magnum and Charger represent 150,000 units, enough to keep a entire factory running. Add the 300 and you’re talking 300,000. This is crazy. I would never do this, and I think the 300 and it’s siblings are butt ugly, but somebody wants to buy them. And the Spinter Van that is a runaway hit? – it sold 21,961 units last year.

    Some of you are mistakenly assuming that Chrysler is so small, so stupid, so inept that they just can’t make it on their own. Folks, we’re tallking about a company that just sold 2,142,505 cars and trucks last year, 2,304,833 the year before. And this is just NA sales. There are another 200,00 to 300,00 sales overseas. That means Chrysler is around the size of Fiat, Renault, or Nissan.

    Is anyone saying that Nissan is too small, so they shouldn’t have a pickup truck, or a sports car, or a minivan? Now I’m not saying they have great vehicles in those areas, but should they not try to make something for that segment because they are too “small”?

    And those sales figures for Mopar are under German mismanagement . Yes mismanagement. Stuttgart has not known what to do with this company since they merged with, bought them. They were doing fine before and had sold more vehicles.

    That’s why I said in an earlier post that retreat is never a recipe for victory. I don’t think axing models (Magnum, Charger), or getting out of an entire market segment (full size pickups) or other “consolidation” efforts are going to create sales or prosperity.

    The best thing that could happen for Chrysler is for Daimler to spin them off. Maybe the union will buy them. That would be interesting, a union owned auto maker. But at least they would be able to chart their own course, do or die, and not be constrained by Daimler.

  • avatar
    Dr. No

    Frank,

    I think Dr. Z should replace Tom LaSorda with me. What a riot we could have in commercials: Dr. Z and Dr. No.

    Oh yeah.

  • avatar
    SuperAROD

    Robert

    Jeeps: Jeeps have a long history of non-4wd, and especially non trail-rated vehicles. One of their most classic beloved vehicles is the Cherokee and it was available in 2wd. Many of their older models are 2wd only, and not even close to T-R. I don’t believe that only Honda, Mazda and Ford are entitled to the CUV market, Jeep has every right to try to expand thier base.

    Chrysler has four of the top 20 cars this month. 300, Charger, Sebring, Caliber. Why exactly should Chrysler pull out of the car market again?

  • avatar
    Steven T.

    “I disagree with the idea of aborting the Dodge Challenger. . . Bringing a new one back, won’t turn all the red ink into black; but it will help make Chrysler look like a winner again. There’s a lot to be said for successfully re-establishing a heritage.” — Terry Parkhurst

    Terry, I agree with you in theory, but question the execution of the Challenger concept, which apparently will be quite close to the production version. That car is far too big and heavy to reflect the heritage of the original. If Chrysler couldn’t afford to come up with a platform more appropriate to a pony car, why take the risk of blimping out the Challenger?

    The problem is one of function and aesthetics. A major draw of pony cars has always been that they are smaller and more nimble than family sedans. The forthcoming Challenger, in contrast, is effectively a full-sized car, because it is based upon a shortened LX platform. This coulda beena Cordoba.

    Meanwhile, unfortunate stylistic compromises were made, such as carrying over the LX’s high beltline. That simply doesn’t work for the Challenger, because it gives the car an “on-stilts” look from the side and a positively truck-like front end compared to the forthcoming Camaro.

    My bet: The Challenger will have difficulty paying for itself even if gas prices don’t go back up that much. Halo? Outside of certain American iron circles, I suspect the Challenger won’t do a whole lot better than the Crossfire.

  • avatar
    thx_zetec

    What always helped Chrysler in the past was not their size but their ability to do something new.

    1. They largely re-ignited the convertible market in the 1980’s. Not sexy cars by today’s standards, but back then the affordable convertible was almost dead.
    3. The minivan.
    4. The PT Cruiser
    5. The “baby bear” (not too big or too small) truck the Dakota. Today this is no great market, but at the time a good idea.

    What can they do now?

    1. Diesel: I agree with this. I don’t believe that diesel engine costs 3000 more to make – I would think only a few hundrd dollars. O.K. my estimate of few hundred is total SWAG, but where is the source for the 3000 dollar extra cost? As for the argument that diesels are built in Europe with high costs, factories can be built elsewhere.
    2. 30 mpg pickup: With diesel you could make a useful pickup with 30 mpg highway mileage. O.K. it might not tow 10,000 lb, do 0-60 in 7 seconds or have a huge crew cab, but this could sell well to cheapskates, people with businesses, etc.
    3. Sprinter: I don’t agree with getting rid of this. For US market a RWD van this useful is a new concept, getting something like 2X the fuel economy of today’s big2.5 vans.

  • avatar
    Paul Niedermeyer

    Have any of you seen pics of Chryslers Nassau concept(allpar.com, etc)? I suspect this may well be the styling basis of the next 300C (same wheelbase). Looks like they’re backing away from the gangsta-Bentley look, which is not aging well for me.

  • avatar
    windswords

    Steven T.:

    (speaking of Challenger) “That car is far too big and heavy to reflect the heritage of the original. If Chrysler couldn’t afford to come up with a platform more appropriate to a pony car, why take the risk of blimping out the Challenger?”

    You may be surprised to know that the original Challenger and Barracuda (E body) had their entire front from the firewall forward taken from the larger B body Charger and Plymouth Satellite. This was done for two reasons: one to save money, two to allow every engine that Chrysler built to fit into the car from the slant 6 up to the 440 and the original Hemi. As such the original Challenger was larger than the Mustang/Cougar and the Camaro/Firebird of it’s day.

    So it’s actually more in line with the cars heritage to be based off of the upcoming LY platform since that is what the next generation Charger will also be based on.

  • avatar
    rtz

    The 2007 Dodge Ram 1500 goes from $14,772 to $40k plus. That says to me that it costs Chrysler what? $10k or $12 to build a Ram 1500?

    I would LOVE to see a bill of materials for an OEM vehicle. How much did the paint cost? The steel cost? The nuts, bolts, screws? Drive line and interior?

    Does anyone have the price it costs an OEM to build a vehicle?

    If they can sell a PT Cruiser for $9,788, how much did that car cost them to build? Did it cost them $7,000 or $8,000 in materials to build? When they sell a PT for over $30k, how much profit did they just make? Don’t even tell me those little “options” add up close to $30k. Not their costs.

  • avatar
    SherbornSean

    Dr. No,
    You’ll never get an executive job with the Big 2.5, because you’re not a “yes” man.

    Get it? “Yes” man? Because “No” is the opposite of “Yes.” See it’s a joke. Funny stuff. Really.

  • avatar
    wsn

    Replying to SherbornSean:
    Dr. No,
    You’ll never get an executive job with the Big 2.5, because you’re not a “yes” man.

    I guess that’s a compliment. One needs some guts and intellegence to be a “no” man.

  • avatar
    thx_zetec

    RTZ

    Cost per car can be defined in different ways, there are two ways of looking at this.

    The first is production cost. This is the bill of materials plus labor etc, and is pretty low. Technically this is the similar to the “variable” or marginal cost of production, cost of making one more unit.

    Second is the “overhead” or fixed cost, this is allocated to each car somehow. Each new Ram pickup may cost only 12k to make (this is just guess) but you still have to pay for fixed costs to stay in business: several billion to develop the vehicle, corporate R and D, pensions, etc.

    Big2.5 sometimes move huge numbers of vehicles at low prices, this pays for production cost but eventually leads to problems covering fixed costs. From the above you can see why the full size pickup market is such a huuuuge gold mine, even at a distant 3rd place Chrysler/Daimlers full size pickup outsells the “best selling” car (Camry or Accord), with 400,000 units. For this reason the odds of Chrysler/Daimler dropping the Ram is same odds as Bin Laden signing on as spokesman for National Pork Council.

    This goes back to my question, how much extra does it really cost to make a diesel? If you can sell a small car for 12k, it might cost 8k to make. If engine is 1,500 dollars and if diesel costs 33% more, this is 500 bucks more. Again I realize that this is all speculation, but I don’t buy the extra 2-3000$ figure, does not make sense.

    Also consider that the greatly expanded volume of car diesels now being made in Europe will decrease the cost per unit, as the technology improves.

  • avatar
    Paul Niedermeyer

    thx_zetec: The $2-3K premium of a “clean” (Tier5, Bin2, as per the CA regs) that I have mentioned on this site once or twice was from a study by an industry consultant and published in Auto, Motor und Sport (Germany). Keep in mind the comparison is against a conventional (non-turbo) gas engine. A current direct-injection diesel already carries the cost of a unique and more robust block and internal components, a turbo-charger, inter-cooler, and the pricey common-rail ultra high-pressure injection system and controls, and the now ubiquitious particle filter. These current diesels typically cost $1-1.5K more in european cars, and manufacturers have an incentive to sell as many as possible because of pressures to meet european CO reduction goals. The clean diesels (Blue-tec, etc.) have substantially greater costs with their NOX catalysts, controls, urea injection, etc. The $2-3K figure represents a range, and the info was gathered by the consulting firm from the manufacturers. How much more is a diesel cost in a Ford or Chevy Pickup, and they’re not “clean” yet?

  • avatar
    thx_zetec

    Paul

    Thanks for the response, I am by no means expert on engine costs. I see your point about turbo, a non-turbo diesel would simply be too slow for US tastes.

    I do think there is some room to cut cost differential, largely through higher production volume. Example you state issue of “unique” components – in large enough volume this issue should go away.

    As far as more robust components, material cost is no that large, but going to higher cost (stronger) materials would add cost.

  • avatar

    Frank – (some) good ideas…but I don’t think you’re taking into account that Perception = Reality, and your suggestions are not aligned with the public perception of each brand. Jeep (my personal fave) is all about the outdoors and off-roading. Kill the Compass (please!) and make damn sure every vehicle is Trail-Rated.

    Dodge is all about the Hemi and MOPAR. Period. Dodge trucks are HUGE in the Texas Panhandle. No reason to ditch that. The reason the Nitro exists is because DCX super-sized the Durango a few years back. Nitro (IMHO) is Ugly on a Stick™. Kill it before it breeds. But if you wanna focus Dodge, it needs to be on performance. The only bad fit there is the Caravan. Everything else in the lineup is SRT-ready.

    Chrysler? Who in the Hell know WHAT Chrysler is anymore. It should be an American Luxury brand. It’s not. I’d kill the bling-ready Aspen, and make everything they sell up-market. Redo the interiors and emphasize their links to German engineering (while that still makes most Americans think “quality” – regardless of the truth).

    That leaves the question of vehicles like the PT Cruiser, the minivan, et cetera. My vote would be to bring back Plymouth as the “family” brand, even though it would make for one more brand. Kill all overlapping badge-engineered models (buh-bye to Nitro, Aspen, Compass, et all), and cull the dealer network, making each surviving dealer a full-line Chrysler/Jeep/Dodge/Plymouth house.

    Love the idea on the Internet purchase, and it could work, too – just divide up a token “dealer profit” by geographic zones. With a reduced dealer network, it could make sense. (The dealers will profit anyway from service, etc.)

  • avatar
    Geotpf

    “Chrysler Suicide Watch”-hahahaha! And it’s true. Daimler Benz’s corporate office really does seem to be intentionally driving the Chrysler Group into the ground. Either that, or they are so beyond clueless that it’s impossible to put into words how plain retarded they are.

  • avatar
    Unbalanced

    Leaving aside the sale by internet idea (which is likely in violation of dealer agreements), DCX should take every suggestion in the article and do the opposite.

    Bloggers are amusingly tidy people, and constantly suggest “cleansing” manufacturers’ line-ups of “duplicative” or enthusiast -unfriendly models. Why have Nitro when you have Liberty? Why have Sebring when it’s so damn ugly? You’ve read it here and elsewhere a thousand times and will read it a thousand more.

    The problem with imposing Aryan automotive purity on Daimler is much the same as with any other purification movement; the world is a messy place. I like Chinese food but don’t care for Thai. So let’s abolish Thai restaurants. Stone washed jeans are geeky; ban ’em. My dad has long advocated the illegalization of peanut butter. Etc.

    So TTAC’ers abhor Sebring and Compass and Aspen and whatever. But 20,000 consumers disagreed last month and lapped ’em up (not even counting the folks who went for whatever). And that meant 20,000 more sales off the Avenger and Caliber/Patriot and Durango assembly lines. And that meant for the relatively small cost of adding these variants to the DCX lineup, factories ran closer to capacity, and money had the potential of being made.

    The reason DCX ran up those ungodly excess inventories isn’t that they had too many models-it’s that they had too few. They kept building because running at capacity generates profits, but they didn’t have demand at capacity levels. If the Challenger were here already, they would have built fewer Magnums and reduced inventory build up. When Patriot comes on line, pressure on Caliber and Compass will likewise decline.

    Or take Nitro. It’s probably taking sales from Liberty, but together they represent a sales increase (19.5K this year vs. 17.5K last year, notwithstanding weakness in traditional SUV’s and Liberty about to be replaced). Likewise, how would the Grand Cherokee plant be doing without Commander running off the same line? Take a look at Explorer/Mountaineer for your answer.

    DCX’s strategy, like Toyota’s, is to generate distinctive platformmates that sell in volume, and it looks like it’s starting to work. I don’t care for Yaris or its Scionmates either but they’re keeping the cash flowing.

  • avatar
    NickR

    I don’t want to wander too far off topic, but I sometimes think that Stephen King’s ‘Christine’ actually existed, and that she cursed Chrysler forever more. Maybe not, but since them, Chrysler seems to have always been very uneven when it came to styling, so much so they do seem to be suffering from some kind of curse. Case in point 1959 – cars looked pretty good for the day, especially compared to some of their contemporaries, then along comes 1960 (awful), 1961 (horrendous), 1962 (comical and ugly), followed by three years of bland. From 66 to 70, they kind of held their own, and then along came the 70s. No one in Detroit distinquished themselves in the 70s, but I’d be happy to peg Chrysler as the worst offenders, especially if you include AMC under their banner. And they’ve been through that cycle again recently. The drop fendered pickup made for a nice change, and the 300 was/is nice. But then….Charger, Nitro, Caliber, Compass…varying between disappointing to awful. If they could even out their styling so that they are at least decent year after year, I think it would help them alot.

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  • Mark Baruth
  • Ronnie Schreiber