Why Chrysler will continue to do well

[BMWDave]

Autoweek Article


At Chrysler group, the sun is shining; COO says company isn't a one-hit wonder
MARY CONNELLY | Automotive News
Posted Date: 5/6/05
The Chrysler group is sitting pretty compared with General Motors and Ford Motor Co.

Chrysler is gaining sales and share in a market that's depressed. The Chrysler 300 sedan has given the Chrysler group a hot aura - and shown that it can make cars that excite U.S. consumers.

While Ford Motor and GM struggle with turnaround efforts, the Chrysler group, says COO Tom LaSorda, is "just trying to maintain the momentum. That is what we are pushing with our employees."

Chrysler faces several challenges in the United States. Its profits declined in the first quarter. A key vehicle, the redesigned Jeep Grand Cherokee, is off to a so-so launch. And it needs to solidify its gains in cars with several coming car launches.

But Chrysler is more than a one-hit wonder, LaSorda says.

"People look at the 300 and say, 'Man, this car has done it'," he says. "But inside, we know that it is not the only winning vehicle."

Minivan strength

LaSorda lists several reasons why Chrysler is likely to continue doing well:

>>> Rebounding minivan sales. Sales of the company's redesigned minivans jumped 15.4 percent to 101,514 units in the first quarter compared with the first quarter of last year. The company's share of the minivan market stood at 38.0 percent at the end of March, an increase of 4.4 percentage points from a year ago.

LaSorda credits Stow 'n Go seating, which allows third-row seats to fold flat into the floor, with boosting sales. He also cites the power of the 300 sedan to draw attention to other models.

"One product can pull in a whole suite of products," he says.

>>> L imited reliance on big SUVs. The Chrysler group's largest SUV, the Dodge Durango, is smaller than the full-sized GM and Ford Motor counterparts. The Durango's size helps as gasoline prices rise, LaSorda says. Sales of other brands' large SUVs are tumbling.

"The Durango is the biggest SUV we have," LaSorda says. "There is a lot of stuff that is a lot bigger."

"We had a good March.We think we can hold it going forward."

Durango sales rose 16.9 percent in the first quarter to 34,476 units. In contrast, sales of the larger Chevrolet Tahoe fell 22.5 percent in the period, and Ford Expedition volume dropped 26.8 percent.

>>> Jeep Liberty diesel popularity. Demand for the diesel version of the 2005 Jeep Liberty is so strong that the company may increase production, he says. And it is likely to exploit its strength by putting diesels in other vehicles.

Jeep originally planned to build 5,000 Liberty common-rail diesel units. Diesel models have been in dealerships since late January, and the company said last week that 1,729 have been sold so far.

Sales tell tale

Sales figures point to Chrysler's uniqueness among domestic automakers.

Through March, the Chrysler group's sales are up 5.6 percent to 546,732 units. In contrast, U.S. light-vehicle sales fell 0.4 percent in the first quarter of 2005. At GM and Ford, sales tumbled 5.1 percent each in the period.

On Thursday, April 28, Chrysler reported a $327 million operating profit in the first quarter, down 17 percent from the same period of 2004.

The company blamed the rise of the euro against the U.S. dollar. Worldwide sales fell to 666,700 units, down 18,000 from the year-ago period, the company said.

Car overhaul

Chrysler still has to overhaul its small- and mid-sized car lineups. And sales of the redesigned Jeep Grand Cherokee have been acceptable but not eye-popping.

In the 2007 model year, the company will replace the mid-sized Dodge Stratus and Chrysler Sebring cars.

"Chrysler's biggest challenge is the Sebring and Stratus replacements," says Jim Sanfilippo, executive vice president of AMCI, an automotive consulting firm in Bloomfield Hills, Mich.

"It's a high hurdle. They will wade right into the pack. The question is what kind of solution they will bring and what thinking they bring to that segment."

The profit and volume potential is huge, he says. But Chrysler will be taking on segment stalwarts such as the Toyota Camry and Honda Accord.

The company has said it will forego a sedan when it replaces the Dodge Neon. Instead, it will rely on the five-door 2006 Dodge Caliber to replace the Neon in the small-car segment.

LaSorda says the Chrysler group will continue to seek the styling flair of the 300 and the Dodge Magnum.

Chrysler, Jeep and Dodge vehicle designs will be strongly differentiated, he says.

The creativity of the vehicle designers imbues a "youthful spirit" in company executives, LaSorda says: "You sit there and think, 'Man, oh man. There are so many choices. It is hard to know which one we should pick'."

[ifcar]

Two of their highest-volume products (Neon and Stratus/Sebring) are up for an overhaul very soon, so a lot of what will happen with Chrysler is up to those products. The move to a hatch-only Neon is not likely to be a huge success, as with the Magnum/Charger, I have to assume and hope that a higher-volume sedan derivative will appear, especially as there will be no sedan version even in another brand.

[Why?]

Chrysler definately makes some nice cars. If the Crossfire came with a 6MT, I'd take a look at buying one. They need MT's in their cars.

[ifcar]

Chrysler definately makes some nice cars. If the Crossfire came with a 6MT, I'd take a look at buying one. They need MT's in their cars.

It does come with a 6MT.    

[mazda6er]

Chrysler definately makes some nice cars. If the Crossfire came with a 6MT, I'd take a look at buying one. They need MT's in their cars.

It does come with a 6MT.  

The man is a genius.  :D  If there was a car-only Jeopardy, ifcar would be like that Ken Jennings guy. Unbelievable.    

[ifcar]

Chrysler definately makes some nice cars. If the Crossfire came with a 6MT, I'd take a look at buying one. They need MT's in their cars.

It does come with a 6MT.  

The man is a genius.  :D  If there was a car-only Jeopardy, ifcar would be like that Ken Jennings guy. Unbelievable.  

Actually, I grabbed for a Consumer Guide book sitting on the floor next to my computer chair, and looked up the transmissions for the Crossfire.  :P