Chrysler Nissan Deal: One More Step To Oblivion For Chrysler?

Posted by: David Kiley on August 7, 2008

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The Wall Street Journal today published a story stating, according to un-named sources, that Chrysler is in talks with Japanese automaker Nissan to essentially supply the Auburn Hills, MI carmaker with mid-sized cars derived from the Nissan Altima.

Such a deal would come on the heels of an agreement for Nissan to supply Chrysler with a version of the Nissan Versa as its next small car. In turn, Nissan is getting out of the business of building its own full-sized pickups and is going to replace the Titan (currently with $10,000 of incentives on it) with a version of the Dodge Ram.

As Chrysler strikes more deals like this to have other parties make its cars (it also has a deal for Chinese automaker Chery to build a small car, but the state of that deal seems in question), one wonders what the company is turning into. The WSJ compared the emerging model at Chrysler with that of computer-maker Dell, which is more of a computer assembler of supplier parts and modules than an innovator in its own right. I might draw a different comparison. Chrysler is shaping up to look more like a Chinese state-owned automaker that relies on joint ventures with other automakers for new models rather than a company that will innovate on its own.

That may be too harsh. After all, Chrysler figures to remain in the minivan business, which it has led, as well as the pickup truck business where it has had a niche. And it will continue to build SUVs, especially for the Jeep brand, which remains the company’s most valuable brand asset. Minivans and pickups don’t exactly look like a growth industry right now, but they are two vehicles that Chrysler knows how to do much better than Nissan.

But Chrysler’s brands are nowhere when it comes to passenger cars. Dodge cars attract a very low quality credit-score buyer, and have very low trust, according to stats I have seen from Strategic Vision in the last couple of years. Chrysler brand is not much better. The newest models—Avenger and Sebring (pictured above)—score in the cellar on J.D. Power’s quality and APEAL rankings. The PT Cruiser has seen its day. And even the once hot Chrysler 300 seems to have lost its freshness. Even when the 300 was hot, it did nothing to move the numbers in terms of what people thought of the Chrysler brand. It was as if the buyers were looking past the Chrysler brand and just focusing on the 300 badge and styling.

Even the current Sebring and Avenger, which would be replaced by the Altima derived cars if a deal is cut, were developed along with Mitsubishi. That program, in which Chrysler had a lot to say about the outcome on styling and engineering, has yielded a terrible outcome. Its development was undercut along the way by difficult working relations between the two companies. When companies and staffs are not financially and emotionally fully invested in the success of vehicles, expect trouble.

I am at a loss about why a discerning customer would opt to buy a Nissan Versa or Altima derivative from a Chrysler or Dodge dealer. For Chrysler, it would seem to be a strategy just to keep the lights on for dealers and those who remain strangely fixated on buying Chryslers and Dodges even when they are Nissans. Too, the profits of such vehicles for the automaker are very small when you outsource a car. That means those cars get very little marketing support. Look at GM and the very little attention it pays to Pontiac Vibe, which is built in the company’s joint-venture plant (managed along with Toyota), and is mechanically the same as a Toyota Matrix and Corolla. GM makes very little on those cars, but they are important to GMC/Pontiac dealer sales volume especially when SUV sales have gone South.

There are lots of joint ventures in the industry today. But outsourcing car production and engineering to Nissan—if this second deal goes through—looks like a strategy for treading water until the company is sold, stripped or more fully integrated into Nissan. It doesn’t look like a play to make Chrysler independent and vibrant.

Reader Comments

Ron

August 7, 2008 11:55 AM

Chrysler's actions remind me of the fake ad in Mad Magazine many years back: "BUY imports from AMERICAN retailers" with the BUY AMERICAN slogan in big letters and the other three words in very small print.

Dominic

August 7, 2008 12:12 PM

Chrysler should have been closed long time ago.
This car maker went from financial trouble to financial trouble, reliability and quality has always been horrible (including trucks and SUVs).
It is and it always was the weakest of the "big three" (this term doesn't make any sense nowadays) for a reason.
I'm sincerely amazed that someone still would consider buying a Chrysler product.
Frankly the brand has nothing left to say and it's time to throw it in the dustbin of automotive history.
Even the "hot" 300C in reality is nothing new, a collage of old parts taken here and there, the floorpan and suspension of an old discarded series of the Mercedes E Class coupled with the "great" HEMI engine, a decades old failure-prone pushrod antiquated architecture that recently was only used for pick-up trucks. All together with a "in your face" gangsta design, appalling assembly quality and extremely cheaply made interiors.
That car could attract only poeple extremely ignorant about automobiles.
The PT Cruiser was an other cheaply made "show off" design.
Have you ever seen the interiors of the new Avenger and Sebring?? No comment....
The Jeep Grand Cherokke has been for years the most towed vehicle in North America....the self-detructing Chrysler transmissions are legendary.
No wonder the brand attracts only certain type of people...
Hyundai is light years ahead in terms of technology reliability and quality compared to Chrysler....
I just hope that with this collaboration with Nissan, the Chrysler "cheap and unreliable" bug is not going to infect the great Japanese automaker...it already did with Mercedes...

Alejandro

August 7, 2008 12:40 PM

Both Chrysler AND Nissan should just shut their doors. Neither company makes a product worth buying. The reliability, styling, performance and economy of their cars is simply horrid.

Jeep could probably be spun off successfully, but every other Chrysler Dodge product is simply junk.

Nissan makes some of the ugliest cars on the road, and their quality is nowhere near a Toyota or Honda.

mr dave

August 7, 2008 1:48 PM

Chysler has truley bacome a shell of a company. They didn't learn after Iacocca saved them in the 80's. They had a decent if bland k-car. They failed to build on that car and improve it. Then they had the Neon. A net little car. But soon buyers realized that they had pitiful quality and sales declined. Again instead of improving the car they ditched it. And their whole co-manufacturing with Mitsubishi back fired, they had MAJOR quality problems of there own, and to me are the weakest of the Japanese manufacturers in terms of reliablity.

Bill M

August 7, 2008 3:38 PM

I've been a loyal Chrysler customer for 30+ years. But when they turn into a distributor of Chinese cars, adios Chrysler.

m.r.

August 7, 2008 3:51 PM

in my opinion, the only way Chrysler will survive this latest downturn is by linking up with Nissan or some other mfcr. that knows how to make desireable smaller cars. I dont think the present management or owners are up to the task
of going it alone! the situation is too severe. for practical purposes Chrysler
must form a partnership with Nissan as a
combined company. dont compare previous downturns with the present situation.
it will take more than a shining knight
to the rescue. it will take a small miracle! let the recovery begin.

gspdave45

August 7, 2008 5:38 PM

As has long been the case, cars built out of a collaboration between Chrysler and Mitsubishi have been utter quality disasters. The two organizations are so far apart culturally that coordination between engineering, manufacturing, etc is doomed to failure. DiamondStar motors, anyone?

Dominic

August 7, 2008 5:58 PM

Alejandro

Evidently you have very little knowledge of the automotive world.
Nissan is one of the healthiest and more profitable car makers around and the alliance with Renault is one of the most succcessful in the industry.
Nissan (which of course includes Infiniti) technological prowess is on par with BMW or MB, if not more, built quality and finishing is top notch almost along the entire lineup and realiability is very high, on par with Honda and maybe, just maybe, a notch below Toyota.
Maybe you do no like the styling, that is a personal thing but Nissan cars are among the best.
Comparing Chrysler to the Japanese brand is like comparing a Yugo Koral with a Toyota Corolla.
However, we both agree that Chrysler should be closed for good.

Dave

August 7, 2008 11:39 PM

Chrysler has to build better quality cars and not skimp on technology. The PT Cruiser was kinda cool looking when when it came out, but underneath the body was a low-tech design and a cheap plastic interior. I think the 300 was a decent car, but then it's only one car in a line-up of not so good vehicles. If I were Nissan, I wouldn't even want to be part of the same business group as Chrysler. I might manufacture a few cars for them, but that's it.

Brad

August 8, 2008 1:30 PM

Bye-bye Chrysler. As we look towards a new generation of American manufacturing, may we be as dedicated to efficiency and quality as Toyota and Honda. It infuriates me that Chrysler would entertain the idea of bringing the ideology of cheap crap into the world of 60mph projectiles going down our freeways. Do we really need to continue financing the expansion of Chinese industrial superiority? But then again, I suppose the model fits since the Chinese make cheap crap and so does Chysler. I think that further, the UAW and the big three need to do some kind of total death and rebirth, a phoenix, reborn in an arrangment that actually is feasible for both company, empolyer, and consumer.

Andy

August 8, 2008 2:13 PM

at least they have the best warranty in the business!! so when they brake you wont have to pay to fix them!

Dr V

August 8, 2008 3:57 PM

well its a shame that Chrysler the company that made the best muscle cars and motors i.e. the 440 426 383 340 318. and the best tranny the 727 tourqe flight is doing bad it dosent matter tho cause i will still buy one

antonio311

August 8, 2008 5:57 PM

Chrysler is still making plenty of new cars! They are changing for the better. Chrysler engineering has made automobiles much better for everyone! Don't even think that Chrysler will be closed or sold off. As a member of the customer advisory board i see the MAJOR changes they are achieving at super FAST speeds. They may just be using the nissan platforms for a quick fix, until they are able to develop their own chassis and cars from the ground up.
By the way, it sooo nice to see all the support of Chrysler an American car company for all the previous posters! Since you all HATE American companies soo much, try moving to Japan and see if they'll hire you there. ;-)

Rich

August 8, 2008 7:27 PM

Let's have a refresher coarse on recent history of Chrysler Corp.(1989 to present).

1989 - Chrysler purchases American Motors Corp(which includes Jeep).

2000 - Diamler/Benz swindles the rights to Chrysler Corp. soley to extract the knowledge and technology Chrysler possessed to take an artists sketch on a napkin to the road within a 2 year timeframe.

2007 - Diamler/Chrysler sells a shell of a company to its current ownership group and NOW they are trying to facilitate life back into what use to be a proud member of the American car heritage that got all your moms, dads, grandmas and grandpas all around this country for generations.

Be careful about who you badmouth before you read into the situation what happened to Chrysler to get to this point of its existance. Simply pitching them aside is exactly what GM and Ford would love to see! And they aren't in any better shape than Chrysler is!

I am a proud owner of all three brands that Chrysler made pre-2000. Solid and comfortable and safe vehicles and quite dependable(all have over 100,000 miles on them). I know many people that have owned the other domestic vehicles that haven't been that dependable and never made it to see 100,000 miles. I'd put my experience with Chrysler Corp. vehicles up against their opinions anyday and anytime!!

Ed Mcclelland

August 8, 2008 8:45 PM

Geez, I really like the Nissan line of smaller cars and sedans, but I am not a big car/truck fan. Chrysler on the other hand should just go away!

john

August 9, 2008 1:45 AM

what upsets me about chrysler is when they close american plants such as there minivan plant in the usa only to build them in canada. every thing about this company is anti american middle class but they still expect that same mid-class to pick their products. hey cerebus how about a new slogan and a new plan PRO AMERICA maybe this can make you BIG again.

Mac

August 9, 2008 7:17 AM

This sounds very like the Rover Story:
Each company was bought by a German company under great fanfare.
(BMW bought Rover, Daimler merged with Chrysler)

A few years later The German parent sells the company when they realise they can't make it work.

The company is stripped down by its "saviours" and begins selling rebadged asian cars, The Tata CityRover or the new Nissler.

Rover lasted about a year in that state.
Good luck Chrysler

herault

August 9, 2008 10:24 AM

For Renault the Nissan deal was a deal of the century. Renault in Europe is now seen as front-runner in terms of reliability and design. The trouble is that the market conditions have changed and the Germans seem more flexible and willing to invest billions. Chrysler is a lost sheep and needs a good shepherd. Nissan may be that shepherd but he will need a big stick....and some Renault luck.

Tyronee

August 9, 2008 5:15 PM

Would you East Coast punters stop with all the doom and gloom speculation about the auto industry. That moron John Tamny even suggested that GM move its HQ to NYC or SF.

scott

August 9, 2008 9:17 PM

Huh? Chrysler knows how to do pickups/SUVs better than Nissan?? Nissan's Titan has consistently been rated higher in a multitude of tests and pubs than the Ram over the past few years. And I wouldnt exactly call Durango and Aspen competitive SUVs.

vmm

August 10, 2008 10:54 AM

CHRYSLER HAS HAD QUALITY ISSUES BUT WAS RANKED HIGHER THAN MERCEDES BEFOR THEY TOOK OVER CHRYSLER. THE VANS AND TRUCKS ARE THE BREAD AND BUTTER OF CHRYSLER AND ARE STILL DOING WELL, BUT FOR CHRYSLER TO SERVIVE THEY NEED TO INVEST IN SMALL CARS. I LIKE MY DODGE RAM AND I NEVER HAD QUALITY ISSUES. THE NEW 09 IS THE BEST LOOKING TRUCK OUT THERE AND I HAVE ONE ORDERED.

Richard

August 10, 2008 5:28 PM

I have always driven a Nissan and it is one of the best cars on the road. The most recent designs are very appealing and impressive. Not sure which market Alejandro is talking about? It could be that in his country Nissan is releasing cheap and less attractive models.

Larry

August 12, 2008 12:17 PM

So if Chrysler is making such bad bad products - why do many many folks continue to buy them??? I for one own a 1991 Dakota with 138,000 miles on it going strong; a 2005 Chrysler Sebring - wonderful car; and now a a 2007 Jeep Patriot that is just totally awesome. I have owned some of the "JAP" stuff and while they were great too - when something went wrong with them it usually meant "refinancing the farm" to afford to repair them. The bigger problem with Chrysler and all of the big three is there short-term/quarter to quarter profit and bonus considerations they have made for to many years i.e. short-term thinking vs. long-term. Chrysler' itself - I blame most or all of their current problems on the German's who owned them up until last year. There general mode of operation appeared to be that all Americans are very stupid and have lots of money to spend as they were the ones that decided to stop making cars almost with Chrysler as I recall at the turn of the century Chrysler dealerships having cars such as the Intrepid/LHS/Concorde, etc. all very capable of getting well into the high 20's/low 30's in gas mileage and being way ahead of most others in terms of design. If the current owner's of Chrysler focus on long-term instead of short-term thinking - believe that while it may be difficult for Chrysler for awhile to come that they will survive and thrive besides. My 2007 Jeep Patriot is an example of more good things to come I hope!!! My two cents worth . . .

moose

August 12, 2008 12:35 PM

Whats wrong with the 300s?

I have a Dodge Charger, based on the same car.

It is the best car I have ever owned, and yes I have owned Mazda, Honda and Fords.

Just go on the internet and read the reviews.

I hope Chrysler will come out of this recession unscathed. At least those people have the guts to come out with vehicles that have a different look, and don't follow heard mentality.

Schmeltz

August 13, 2008 1:46 PM

I agree with the points you made David, especially regarding the question as to why someone would want to buy essentially a re-badged Nissan small car, or vice versa, a re-badged Dodge pick-up. Not to imply that either products are bad, (they're not), but why not just go purchase the original and not the derivative? Here's my observation: The two companies seem to compliment one another in areas where the one may be strong, and the other is weak. Being it takes roughly 3 years to get a car from drawing board to show room, this "arrangement" gets new product in weak areas of either companies to showrooms more quickly. Also, it saves design/engineering/development costs for each company, hopefully freeing funds for other necessary programs to develop such as electric cars. This arrangement could also be auditions for a future marriage. The two look good together on paper, the determining factor will be when we see their synergies in action and actually see the products they are collaborating to bring to market.

RichP

August 20, 2008 4:00 PM

Chrysler suffers from the same malady as the other manufacturers, design by accountant. They save pennies on parts that take hundreds of dollars to fix, jeeps suffer from bad evaporators for the AC, $100 part, $800 labor to remove the dash to get at the heater box, Chryslers also suffer the same problem. We have 6 jeeps and 4 minivans in the family, 4 failed evaporators in the jeeps and 3 in the minivans. Plastic lever on the defroster and heater doors, $15 part, $800 labor, again the dash has to come out and heater box too. So much for their wizzbang design technology.
No access hole for the fuel pumps in jeeps, $200 labor to drop the tanks, another design by accountant. So much poor implementation of their designs when simple common sense should tell them thats not a good idea. It's almost like it's designed to provide an income stream to their dealers. Final acceptance needs to be done by someone else then the designers, engineers who are patting themselves on the shoulder and totally blind to what they are building in the real world.

John

September 1, 2008 5:23 PM

I agree with what Larry has to say (above) about Chrysler's long-term thinking. Chrysler cars and vans are good solid values. As one example, I bought a new Dodge Caravan in 2003 and have never had any major problems with it(100,000 miles and counting), and it is a great ride (and good gas mileage for a V6 at 21 mpg). Could have bought a Toyota or Honda, but it would have cost $6,000 to $7,000 more similarly equipped (with financing, that's about $10,000 more), and we wonder why Americans are in such debt today. I have owned several Japanese cars, and while they were all very good cars, you better hold onto your wallets when you have to take it in to get it fixed or perform maintenance. Any car today will last 150,000 - 200,000 miles (see Consumer Reports April 2008 issue)if it is properly maintained. I will continue to buy Chryslers as long as I can get them at 3/4 of the cost of a similar Japanese car.

JNAP JEEP

September 23, 2008 7:54 AM

Any news on the latest talks with Nissan and Chrysler's Steerling Heights Assembly Plant.

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