The Chrysler Patient: Prognosis Guarded
Analysts will have a lot of uncomfortable questions tomorrow when Chrysler reports post-bankruptcy financial results, while Fiat unveils “la strategia grande” domani in Italy. They will finally unveil their long-awaited 5 year plan.
According to Reuters, “more questions than answers could still remain about Chief Executive Sergio Marchionne’s turnaround strategy.” The most uncomforting question will be: “Are you sure?”
Or, in more elaborate form, “how can Fiat succeed where previous owners Daimler and Cerberus Capital Management walked away bruised by losses,” analysts wonder according to the Reuters story. They miss the cars Chrysler is supposed to sell. Consumer Reports called Chrysler’s lineup of cars “woefully uncompetitive.”
The Wall Street Journal likewise sees “reason for skepticism,” and benignly states that “Chrysler remains work in progress.”
Oliver Hazimeh, a partner at consulting firm PRTM, has a simple solution that assures immediate success for Chrysler: “They need at least one or two what I would consider ‘home runs’ — really nine out of 10 strong ‘buy’ recommendations by Consumer Reports. And they need to have two or three additional, also very strong, product offerings.”
See? It’s not that hard.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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The new Grand Cherokee is due out May 10. It will be an appealing car, but unfortunately in the fading SUV market. Still, it's a Jeep, and will have good new features, particularly in the suspension.
Is Jeep not being spun off any day soon?
The problem with Chrysler as it is now is not that there are a few bad cars in the bunch. Ford has the Ranger as a woefully-aged vehicle, and the Focus which isn't very good either. Chevy has the Colorado, Cobalt and Aveo. Toyota has the Yaris and (to a lesser extent) Corolla. Chrysler's problem is that all of its cars are pretty universally terrible in their segments. I needn't even discuss the Sebring and Avenger. Then we have the Caliber, which isn't particularly fuel-efficient, and the Compass and Patriot twins which are both unconvincing as off-roaders and aren't particularly great on-pavement either. The Jeep Liberty and Dodge Nitro are both bad, with the Liberty being worse than the Liberty design it replaces. The Challenger is really too heavy for the ponycar segment, and there aren't any heavy-duty GTO-type muscle cars for it to compete with. Even then it's heavy, and it's base model V6 is horrifically underpowered for a "sports car." The Journey isn't particularly great in its segment, having been totally overshadowed by the Edge and GMC and Chevy crossovers. The Dakota is old, guzzles gas, and it's big, heavy and ugly. Even the terrible Colorado beats it in sales. Meanwhile, its bigger brother RAM is better but it showed up to the party with exactly the wrong virtues for these times (recreation-oriented coil shocks when the market demands leafs for work duty.) Basically the entire current product portfolio is a total mess. And so Chrysler would have to change every product immediately to really sort things out. And that assumes that the changed products score a hit with American audiences. That also assumes that potentially damaging risks work (such as the plan to replace the Compatriots with the much smaller Panda). For a great deal of people Chrysler is already dead-no competitive products, a monetarily-bankrupt company, an exhausted design and development team, and lots of mixed connections with Daimler that Chrysler is still trying to sort out. I think a lot of people would like a stylish, high-quality Chrysler product, but till the product nightmare is really and truly sorted out the vast majority of customers are going to steer clear of Mopar. All of that makes a recovery difficult to impossible even under favorable conditions.
I knew it was all over but the cryin for Chrysler and GM when they got the bail out money! Just a matter of (not very much) time! Poor, poor tax payers!