After a quiet few months following the launch of an all-new Jeep Grand Cherokee in June, the Chrysler Group is now preparing for a flourish of new model introductions in its key North American markets. But is replacing or updating, rather than discontinuing so many of its slow-selling vehicles really what this troubled firm should be doing?
Were it not also the name of the company, it would surely have made infinite sense to abandon the Chrysler brand as part of last year’s bankruptcy proceedings. That may seem an extreme measure but consider the facts: even as its sales have improved, this division has been regularly outsold in most months of 2010 by Volkswagen, Lexus, BMW, Mercedes-Benz, Mazda and Subaru among others.
Can the new Chrysler 200 realistically take sales away from the Camry and Accord?
Now for North America’s 2011 model year, comes confirmation that the entire Chrysler model range is to be updated or replaced. The 200 sedan will no doubt show a large improvement in monthly numbers over its poorly performing Sebring predecessor once sales begin in the fourth quarter. But can the 200 realistically take a large volume of sales away from rivals as strong as the Camry, Accord, Fusion, Malibu, Altima and Sonata, not to mention the forthcoming Kia Optima and VW’s US-built NMS sedan.
It also seems a curious allocation of scarce financial resources to re-engineer the 200 and its Dodge Avenger twin to take the group’s new Pentastar engine: 90% of buyers in this segment are perfectly happy ordering a four-cylinder model.
Likewise, why has so much investment been made in a replacement for the Chrysler 300 sedan? It competes in a segment where the Chevrolet Impala rules and one where not even Ford (Taurus) or Toyota (Avalon) have been able to sell anything like the number of cars they once did. Even with relatively stable gasoline prices, US buyers continue to stay away from the mass market brands’ biggest cars, preferring instead to stick with four-cylinder mid-sized models.
Fiat must be careful not to upset unions as well as governments in the US and Canada
Chrysler may well make some modest returns from a new generation of the big 300 sedan and its twin, the Dodge Charger but that is not the point: these models simply had to be built as the factory that produces them is controlled by one of Chrysler’s largest shareholders, the Canadian Auto Workers union. It is worth dwelling on that fact as it underlines much of the thinking behind the way Chrysler is now being run. Fiat, for all its own management expertise, must still be cautious not to upset unions in both Canada and the US, as well as government shareholders in both those countries.
Considering the restrictions that Fiat must work with, the company is doing a decent job of reinventing the Chrysler Group. The hardest decisions are yet to come, of course. How will Fiat fund the large investments needed for a new generation of Chrysler and Dodge minivans that it will need to launch in less than three years’ time? Or indeed, how to make a business case for a new platform to replace the LX rear-wheel drive sedans?
By 2012, the Chrysler Group will be running six divisions
On top of pending major investment requirements, both the Chrysler Group and its North American dealerships will, by 2012, have to allocate continuing resources to manage Chrysler, Dodge, Ram, Jeep, Fiat and Alfa Romeo divisions – six brands where larger rivals such as American Honda compete with two.
Chrysler has proved critics wrong on many occasions throughout its long and at times dramatic history. It may yet do so again. But does this company really have the right strategy in place at a time when both Ford and General Motors’ hugely slimmed down brand and model portfolios seem to be working wonders for their North American operations?
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
