Sergio speaks: Chrysler's future will be better

Posted by: David Welch on October 2, 2009

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New Chrysler CEO Sergio Marchionne hasn’t been talking much since the company emerged from bankruptcy on June 2. While rival General Motors has come out with an aggressive advertising campaign that attempts to get skeptics to look at its new cars, Chrysler has stayed under wraps. But Marchionne did take the microphone after sales came out on Oct. 1 and showed that he has a realistic view of Chrysler’s place in the world.

Marchionne spoke on a web video after sales results came out on Oct. 1. He had to pump up the troops a bit, since the numbers were pretty bad. Chrysler’s volume for the month fell 44% (only GM had a steeper decline) and market share fell to 8.3% for the month. That’s below the 9.2% share that Chrysler has been holding throughout the year and well off last year’s 11%. Chrysler figured it could hold 10% in its turnaround plan submitted to the government.

The Italian CEO had a reasonable explanation. He said that the cash for clunkers program started not long after Chrysler emerged from bankruptcy, during which time the company had shuttered plants. When the clunker program started Chrysler already had thin inventory. Of course, Chrysler also had its own incentive programs on top of the clunker cash which blew through inventory of its passenger cars early in the clunker program. But add it all up and Chrysler is being hit harder by the clunker hangover than others, he said. “We just came off cash for clunkers,” Marchionne said. “Most of our plants had been out of spring and substantial part of summer. The heavy incentive checks that one could find in most years are no longer available. Your starting point was exaggerated.”

In other words, the rebates and spiffs artificially inflated the company’s market share. Welcome to Chrysler, Sergio. Chrysler’s product line simply isn’t good enough to claim 10% market share without steep price cuts. Consumer Reports doesn’t recommend any models, despite the fact that erstwhile CEO Robert Nardelli made hundreds of changes to Chrysler’s cars in an effort to bring the lineup up to snuff.

Still, Marchionne said things will get better. “September is not an indication of future performance,” he said. “You may see similar numbers in October. Don’t be alarmed. We’re not bleeding as people think we are. The level of cost consciousness in this high is historical high. The real important issue is to build a future. The future is a lot better than the market share.”

The question is, what will built that future? The company has only the Jeep Grand Cherokee and Chrysler 300 sedan coming in the near future. Both look good but neither of them are game changers. In 18 months or so, Fiat will have some of its cars coming. We’ll see how those cars do. Americans know little about Fiat cars and too few consumers shop Chrysler and Dodge dealerships for compact cars and family sedans. To show a better tomorrow, Marchionne will have to reveal some real surprises with his November plan.

Reader Comments

Schmeltz

October 2, 2009 12:51 PM

Short of inventing and marketing a perpetual motion machine, I find it extremely difficult to envision what can be done to keep Chrysler alive in the ensuing months/years. Damaged brands and companies can be fixed, however it almost always takes years, if not decades of excellent decisions, great products, and zero mis-steps. Take Hyundai for example. When it first started in the U.S. market, the vehicles were of wretched quality. Now, the products are high quality, high value, and the company is a formidable force that even its Asian counterparts are taking notice. Fixing a company takes lots of time and money, two things Chysler Group has little of. One has to wonder if the primary goal of this partnership or whatever it is called, was to simply provide a back-door into the U.S. market for Fiat, by allowing the Chrysler side to fully die?

What can be said in November that already hasn't be said for this company? What can be tried or done that hasn't already been tried to save the Chrysler brands? Stay tuned I guess.

antonio311

October 2, 2009 3:03 PM

Business-WEAK again is bashing Chrysler. Remember Chrysler is the most innovative car company on the planet. They alone created a brand new segment the Minivan, and continue to own that market hands down. They also have improved their quality, and the Chrysler brand is above the industry average, and above BMW. Chrysler cars also have been getting award after award for their 5 star crash test results. The Hemi is consistently names 1 of wards 10 best engines in the world! The Jeep line is a cash cow, and has been increasing sales monthly. Chrysler is the # 1 seller in Canada. And Chrysler continues to sell about 2 million vehicles per year, without any overseas sales....! With Fiats distribution that number will be closer to 4 million vehicles per year within the next 5 years! Business WEAK forgot to mention these FACTS. Chrysler is Americas car company!

alan

October 2, 2009 3:48 PM

Chrysler has four huge stigmas that will be hard to overcome:

1.A massive UAW presence and strong control or influence by the UAW.

2.A strong association with Detroit.

3.The presence of Mr. Obama and his car czar.

4.Fiat's history of failure in America.

This is all added to a history of inferior product and inferior reliability on the part of Chrysler.

racerx

October 2, 2009 5:27 PM

Antonio311 sir, Chrysler hasn't sold 2 million vehicles since 2001.. Today they are tracking below 750,000 They don't have competitive fuel economy, quality or price positioning. The only way they can survive is with fire sale incentives. The company is in total denial. they are already dead the bullet just aint hit em yet

Guitarz17

October 2, 2009 6:16 PM

For the most part, I am tired of the Chrysler bashing as well. If I was in the market for a new car, it would be a 300C Hemi.....hands down, no question. I drive a 2003 300M that is nothing short of fantastic. 6 years old, no problems whatsoever. It looks great, runs great, drives great, and gets 31 mpg on the interstate. If I was to be in the market for a new truck, it would be a new Dakota or Ram. My 2001 Dakota has 120k miles, and it runs like it did the day I bought it, looks new, drives new, and has given me absolutely no trouble. So as far as I am concerned the guy who wrote the above article is just talking to hear his head roar. What a maroon. Opinions mean nothing. ABSOLUTELY NOTHING. Facts are everything. And the fact is I am a car buyer and have always driven Chrysler products. If the idiot above has never owned one, he should go buy one and learn about the greatness of Chrysler. Dude, find a new job. You suck at this one.

Commie Stooge

October 2, 2009 7:43 PM

When Chrysler finally does come out with a decent midsize sedan call it the Dodge Dart!
The Dart/Valiant C Body was Chrysler's best selling and beloved car of the 60s/70s.
The SUV proved to be the crack cocaine of the 90s.
Everyone knows that an Accord or Camry stands for reliability & stylish economy.
Two things that Chrysler Forgot!

Christian

October 4, 2009 10:45 AM

@Antonio311 - (quote) "Chrysler is the most innovative company in the planet?" And your ONLY example is the mini van? LOL Man you should become a comedian. You have what it takes. Do you even know what innovation means? Have you ever heard of quattro from Audi, ABS from Mercedes, airbags from Mercedes, and the incredible, unparalleled engines from Porsche? I could give another 100 examples of some of the technologies from the Germans, especially Mercedes, but the space is short. So let's just agree that the Germans and the Japanese are the real contributors to innovation in the car industry. The best car Chrysler put out in years was the 300C which is a Mercedes bin-parts car. And of course, I have to give credit for the wild Viper. Other than that, the world would be a better place without the hideous cars from Chrysler. As a matter of fact, if Marchionne has any brains he should just kill Chrysler, and come out with three brands: FIAT (which has a better chance as a brand than Chrysler in my opinion), Jeep (SUV's only) and Dodge (Pickup trucks only) and let someone else keep the dream alive for the Viper.

Ballbuster

October 5, 2009 2:25 AM

Chrysler is dead. Gone. Fini. Nothing short of a miraculous divine intervention will Chrysler resurrect from the dead. Nardelli, the "Butcher," had plunged his cleaver tainted with his personal poison into the heart of Chrysler. After years of lies and inferior vehicles under the leadership of Nardelli, Chrysler has lost credibility to all except the idiots who still believe in what emerges from Nardelli's gas belching orifice. Chrysler has nothing plausible in its pantry of technology. Having ignored VVTI, hybrid technology, Atkinson engines, Chrysler reaches back for the glory of yesteryears technology: Ancient large displacement engines such as OHV Hemi. Hemi is an anachronism as much as Nardelli and runs equally as dirty. Under Nardelli's ineptitude, America surrendered to foreign domination one of its three pillars of the auto industrial might. In these hard economic times, the American auto worker as well as all
Americans be will forced to take the back seats under the policy of Rome.

seel

October 17, 2009 1:42 AM

Unfortunatly, I have to agree with the bashers here. I do drive a 07 Grand Cherokee Diesel and love it but it is about the only Chrysler prouct I would consider, their small/medium cars suck. I want the US companies to make it but Chrysler has fallen way behind the 8 ball. I am from Detroit and myself and most of my friends buy Detroit if at all possible. With that said two of my friends bought mini-vans but could not buy the Dodge as it just could not compare to the Honda, both of these guys are die hard US car drivers but they both said the Dodge was a POS compared to the Honda so Chrysler dosen't even have that going for it.

I hope Fiat can save them but they need something different like diesels for Jeep/Ram and some decent small/medium cars.

Jycltd

October 19, 2009 3:45 AM

Guitarz17 you better start buying all the Chrysler cars and parked it in your garage plus your neighbor's garage because in about 2 years the only Chrysler left for you to purchase is a 1-10 scale replica model of yesterday's Chrysler. Please be real, I just do not believe that given a choice between Chrysler and say a Ford, Toyota and or Honda that you will hands down choose Chrysler. Again who knows perhaps you just want to be real funny.

Fred

October 24, 2009 5:19 AM

I wouldn't buy a Chrysler today, I don't care who builds them, as they are little more than junk, just like the rest of the four wheeled garbage American automakers have belched from UAW factories for the past thirty years or so.

The same thing goes for anything else this bankrupt nation produces today. Nothing but second hand and third rate technology, thanks to a corrupt government more interested in acquiring power and employing interference than anything else.

Do yourselves a favor - buy Japanese or Korean, you will have a vehicle that actually runs for a while.

Not that I would ever buy any new car, the last new car I bought was in 1978, a Dodge Magnum, triple black, 400 cid, fully equipped. It was a dissapointing piece of junk, a harbinger of future America, produced when idiot Jimmy Carter ran this farce called the United States.

As for yesterday - I still own an American car from long ago, and drive it every day, a 41 year old rusted out Plymouth coupe with 561,000 miles on it, just breaking in her second engine and transmission.

Tom

November 25, 2009 6:35 PM

Thanks Fred - that was very helpful. I would've like to heard from someone that actually bought at least one American car built within the late 20th or early 21st century though...
I am a quality engineer for a major automotive supplier that has most all major North American OEMs in it's customer portfolio. We get to see and compare the company cultures, quality systems, and design prociencies of all of them, sometimes much to our entertainment. I'll tell you now, that no company does everything right, including ours. Different companies have different strengths and weaknesses - I don't care who they are. There are a few of us (Tier 1 quality, purchasing, etc.) that get this unusual bird's eye perspective.
Many in Chrysler's working-level engineering ranks will tell you of the massive wringing of value that Mercedes wrought on Chrysler during their ownership. The brand had value stripped from most all of their commodities, including the ones you the public see (most noteably interiors), and that lead to a public perception of cheapness, and to diminished quality. Engineers were threatened with their jobs if they failed to design-down their products. Thankfully Cerebrus began putting value back into the vehicles, and Fiat seems to be keeping that same course, so we shouldn't continue to see lackluster product reviews in the press. In the short term, even adding significant value to existing platforms will go a long way toward swaying public perception, without the clean-sheet, major investment retool, start-over approach - there is still interest in some of their current products, and mild to moderate makeovers can give some existing products legs that buy time and investment capital. Let's see if that is part of what is up Marchionne's sleeve?
But nobody seems to hold Mercedes to a sharp stick for their financial raping of Chrysler, they just blame other factors - the same factors that exist in more solvent domestic ventures. Chrysler has partially been the victim of corporate raping and pillaging common in an open business environment - this behavior isn't regulated, and I question if it should be. But when unregulated corporate greed is the motivating factor in our greatest corporate mergers, don't be suprized that we have a situation that puts our nation's economy at risk as Chrysler's and GM's near-closure did. We didn't take the impact seriously years ago - why now? So it looks like we have three choices: 1) proactively regulate, or 2) passively allow them to be disolved, dismantled or fail, or 3) reactively bail them out. I wonder in the end, which one preserves the greatest amount of value to the shareholder and our nation's GDP?

Nipcarssuck

February 18, 2010 6:30 AM

Japanese cars are eggs on wheels-they are soulless, bland, utilitarian movers of equally bland, soulless, uninspired human beings.

I have driven many different makes of vehicles and I have been most impressed by Chrysler vehicles. In fact, for many years Chryslers were known for their superior engineering. True, the K-Car (and derivatives thereof) era was rather lean on product variety, but that period is long past.

One of the most unfortunate developments among North American automobile consumers has been a willingness to accept the homogeneity that pervades the automotive industry. The endless goal of greater efficiency has resulted in manufacturers limiting the extent to which customers can order a vehicle that is unique in terms of options, colours, etc. Instead of the many permutations and combinations once available to the car-buying public, options are grouped in to "packages" and colour choices, especially those for interiors, are limited. Long gone are things like two-tone paint jobs, vinyl roofs, etc. .

Moreover, four-door vehicles have become the majority on our roads. How can someone who has even a moderate appreciation for automotive beauty prefer a four-door, japanese, econo-box, egg on wheels to a two-door Challenger, Mustang or Camaro? With families now averaging slightly more than one child per household, there is plenty of room in the backseat for kids, and the trunks are quite capable of containing most of the items an urban family might need to carry.

Long live the great North American automakers!

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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