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post #1 of 1 (permalink) Old 02-18-2008, 09:26 PM Thread Starter
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Calculated cuts are Chrysler's best hope

From the Detroit Free Press:

Calculated cuts are Chrysler's best hope
New model lineup must be streamlined and competitive
by:Mark Phelan

Chrysler executives have said they need to drop one-third to one-half of the vehicle models in their product lineup.

That leaves no room for sentimentality, only cold calculation as Chrysler LLC's leaders now decide which cars and trucks to eliminate as the company fights for survival.

The multiplicity of models Chrysler built when it sold 3 million cars a year is an extravagance the new, smaller company cannot afford, vice chairman Jim Press recently told the company's dealers at a meeting.

The model line is riddled with overlap and uncompetitive vehicles. Chrysler management has said it must shrink to 18 or 19 vehicles.

Getting to that level will require a focused redefinition of the brands and a willingness to scuttle nameplates with grand histories and rabid fans. The company must then add new vehicles to move into popular market niches it doesn't compete in now.

But there are only so many seats in the lifeboat being launched in Auburn Hills. Squeezing an extra body aboard isn't an act of generosity; it's folly that will swamp the boat and doom its crew.

The automaker currently builds 25 or 30 vehicles for its Chrysler, Dodge and Jeep brands, depending on whether you count things like the two- and four-door versions of the Jeep Wrangler as one model or two.
"When you clear away the models that duplicate each other, it becomes obvious where the open spaces" for new models are, said Jim Hall, managing director of Birmingham consultants, 2953 Analytics.

Slim down, swap out
For instance, the Dodge Nitro is too similar to the Jeep Liberty, with which it shares all its major systems, much of its looks and a toehold in the rapidly shrinking market for midsize SUVs.

If you eliminate the Nitro, it becomes apparent that Dodge could use a small crossover SUV to get into a growing market populated by vehicles like the Ford Escape, Honda CR-V and Chevrolet Equinox.
And there's no need for both the Chrysler Town & Country and Dodge Grand Caravan minivans.

Press recently told dealers that launching both minivans cost the company $100 million more than a single model would have. That figure is probably looking only at marketing costs.

When you add the engineering, purchasing and manufacturing cost of building and buying parts for two models versus one, the tab is probably considerably higher.

If you delete the Grand Caravan, another gaping hole in the company's model line becomes evident.

Dodge should add a midsize to large crossover SUV to get a share of the market enjoyed by popular models such as the Honda Pilot, Saturn Outlook and Toyota Highlander.

Then there are the models that don't fit the brand profile.

The Viper sports car, while lovely to look at, doesn't make sense in the Dodge lineup. Dodge needs performance models, but an $84,460 two-seater is too far removed from the rest of the brand's lineup. The $37,995 425-horsepower Challenger SRT8 is Dodge's natural flagship.

Next, deep-six the Jeep Compass compact SUV. The attempt to broaden Jeep from an off-road brand has failed. Its product line should be limited to vehicles with real off-road ability.

No automatic fix
As the automaker trims weak models from its lineup, some people talk as if dumping one so-so vehicle automatically will transform the surviving loser into a winner.

It won't. Addition by subtraction is a myth. The only way to add is by adding.

That's how math works.
Here's the theory, flawed as it is: Neither the Chrysler Sebring nor Dodge Avenger midsize sedan is selling as well as Chrysler wants, and they are similar enough in price and size that they compete with each other. The assumption is that Chrysler could drop the Sebring -- reducing the company's manufacturing costs significantly -- then make more money by selling as many Avengers as it previously did both cars.

One of them must go, but not every Sebring buyer will conveniently switch to an Avenger. And that's more bad math: The commutative principle does not apply here.

Chrysler needs to attract buyers by developing appealing new models in market niches it has ignored and by improving the vehicles it keeps.
Otherwise, this lifeboat won't make it ashore.

---
Chrysler Vice Chairman and President Jim Press unveiled the all-new 2008 Dodge Challenger SRT8 at the Chicago Auto Show on Feb. 6, 2008.
Defining distinctions key to brand success

To sell its three brands successfully from a single showroom, as it plans to do, the company will have to sharpen the distinctions between Dodge and Chrysler.

Dodge is intended to become the company's full-line, mass-market brand, with a wide range of vehicles and a rough-and-ready image nurtured by its styling, truck lineup and participation in NASCAR races.

Jeep simply needs to get back to its roots: the ultimate go-anywhere vehicle, as at home in the High Sierras as at an exclusive private club.
Ironically, the company namesake is the least defined of its brands -- exactly
what is a Chrysler?

Executives must craft an identity that builds on the strengths of Chrysler's current lineup: the head-turning looks and performance of the 300 and the room, comfort and style of the Sebring convertible and Town & Country minivan.
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