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Can a Toyota Man Fix Chrysler?

From the New York Times:


Can a Toyota Man Fix Chrysler?


DETROIT — Of the big American car companies, Chrysler has a well-earned reputation for extravagant marketing stunts.

The debut of the new Dodge Ram at the Detroit auto show in January was typically over the top, as cowboys on horseback herded 120 head of cattle through the city to publicize the rugged appeal of the pickup.

Chrysler’s new vice chairman, James E. Press, gamely played his part in a western-style jacket. “If you think that our truck is all hat and no cattle, keep an eye on yonder horizon,” he said to an audience chewing on beef jerky branded with the Dodge logo.

But Mr. Press, a veteran of 37 years with Toyota who distinguished himself as a serious salesman of sensible Camrys and Corollas, was visibly uncomfortable in the role. He acknowledged as much in a later interview as he discussed how Chrysler must change to survive.

“We need to be focusing more on the substance and less on sizzle,” he said. “Instead of being remembered for cattle, you’d like the Ram truck to be remembered for winning the showdown with the Ford F-150.”
Mr. Press surprised the industry last year when he left Toyota, where he had been a board member and the company’s highest-ranking American executive, to join Chrysler, smallest of the troubled Detroit Big Three automakers.

Steeped in Toyota’s customer-driven culture of continuous improvement, Mr. Press, 61, had been the steady hand behind the Japanese company’s methodical expansion in the United States. Now as Chrysler‘s vice chairman and president, Mr. Press is trying to bring stability to a company known for stomach-churning roller-coaster rides through boom and bust cycles — from the government-loan bailout in the late 1970s under Lee Iacocca to its failed marriage with German automaker Daimler-Benz.

Mr. Press clearly wants to improve Chrysler’s erratic image, whether he’s visiting dealerships, holding town hall meetings with employees, or answering e-mail messages from consumers.

At a seminar last month at the Levin Institute, an education and research institution in New York, he fielded questions about Chrysler’s struggles by comparing it with a certain Japanese juggernaut. “In some ways it reminds me a lot of what Toyota was when I went there more than 30 years ago,” he said.

But with a dwindling market share at home and a minuscule presence internationally, Chrysler may be running out of comebacks. Saddled with a model lineup that is heavy on gas-thirsty trucks, Chrysler lost $1.6 billion last year, leading to the breakup of its ill-fated, eight-year-long union with Daimler.

Then last August, the private equity firm Cerberus Capital Management bought an 80 percent stake in Chrysler at the fire-sale price of $7.5 billion and immediately began cutting jobs and costs.

Cerberus brought in the former chairman of Home Depot, Robert L. Nardelli, to oversee the reorganization as Chrysler’s chairman, and then hired Mr. Press to overhaul its products and invigorate its sales and marketing.
“What the consumers are really interested in are the facts, the details, the bottom line,” said Mr. Press. “We’re going to have a very effective product line that will do the talking for us.”

That’s a tall order, even for an executive with Mr. Press’s experience. Chrysler’s sales in the United States have slid 13 percent so far this year, and its vehicles lag in head-to-head comparisons with rival automakers. Consumer Reports magazine recently ranked four Chrysler vehicles among its 10 worst cars sold in the United States.

Industry observers wonder where Chrysler fits in an overcrowded market led by General Motors, Toyota and the Ford Motor Company, which are much larger companies with far greater resources than privately held Chrysler.

“I view it as mission impossible,” said Jack Trout, president of the marketing strategy firm Trout & Partners. “Chrysler is such a distant fourth, and it lacks an identity. I mean, what is a Chrysler?”

What Chrysler is now is a shrinking entity with a 13 percent share of the American market and international sales of less than 250,000 vehicles a year, excluding Mexico and Canada.

Mr. Press says that Chrysler’s size can be an advantage if it can more quickly respond to changing consumer tastes. Its goal, he said, is for Chrysler to be the “best little car company in America,” with global sales of about three million vehicles, less than a third of what G.M. and Toyota sell.

Last month, Mr. Press announced Chrysler’s “Project Genesis” plans to its American dealers, which calls for reducing its current lineup of about 30 models and consolidating Chrysler, Jeep and Dodge franchises nationwide. The automaker had already announced plans to trim slow-selling models like the Chrysler Pacifica crossover vehicle and the Dodge Magnum wagon.

“When I first came to the company, the orientation was about wholesaling cars to the dealers as opposed to retailing cars,” Mr. Press said. “That change has occurred, and now we can be responsive to what out customers want.”

To lure consumers back into its showrooms, Chrysler has begun adding expensive options to its bread-and-butter vehicles without raising sticker prices. “We’re taking our most popular vehicles and we’re putting them out there as higher value,” said Mr. Press. “People need more car for less money.”

Chrysler’s dealers, who chafed at being force-fed unwanted inventory in the past, have welcomed the new customer first mantra of Mr. Press.
“It’s a 180-degree change from what we had before,” said Jon Myers, who owns a combined Dodge and Chrysler brand franchise in Naples, Fla. “Jim has made some moves that the dealers have been suggesting for a long, long time.”

Mending fences with dealers and customers may be the easy part. To be successful, Chrysler must improve its quality and strike a chord in the market with new products like the Ram pickup and its Dodge Journey crossover.

Moreover, the automaker needs to develop vehicle platforms that can generate big sales in critical segments, like midsize passenger cars, as well as increasing volume in European and Asian markets.

One industry analyst said Chrysler appeared destined to fight an uphill battle against larger, more global competitors like G.M. and Toyota.

“I’d say the odds are 50-50 that Chrysler will make it,” said Brett D. Hoselton of KeyBanc Capital Markets. “It costs $1 billion to develop a new car, whoever you are. But the question is, are you going to produce 100,000 Chrysler Sebrings with that $1 billion, or one-and-half million Camrys?”

There are also questions about the long-term commitment of Cerberus to resurrecting Chrysler. The firm’s chairman, Stephen A. Feinberg, rattled some Chrysler executives with a letter to investors in January that played down expectations for the automaker’s revival.

“We do not need to transition the car industry or even to return Chrysler to a much stronger position in the U.S. car market in order to be successful,” Mr. Feinberg wrote.

Mr. Press seems unfazed by Chrysler’s uncertain prospects. He said he had no timetable for his job, and declined to reveal the length of his contract with Cerberus or his compensation should Chrysler be sold again or taken public.

He said his career was, in fact, winding down at Toyota when he was approached by Cerberus last year, and “the timing was right” for a new challenge.

“I wasn’t looking for a job,” he said. “I think of this in terms of what I can do to support or help or contribute. It’s the way I was raised at Toyota.”
In Detroit, industry circles are constantly buzzing about the relationship between Mr. Nardelli, Mr. Press and Chrysler’s other vice chairman, the manufacturing chief Thomas W. LaSorda. Can three high-powered executives co-exist in the cauldron of a turnaround effort?

“The synergy there outweighs the conflict,” Mr. Press answered. “We’re not the typical insider group. We come at this from a very different place and the establishment is kind of concerned about, what if this works?”

His transition from Toyota paralleled changes in his personal life. Divorced and the father of four grown children, Mr. Press was remarried in 2006 to Suwichada Busamrong, a Thai businesswoman with two young sons. The family makes its home in a century-old townhouse on the Upper East Side of Manhattan, but is looking for a house in the Detroit suburbs.

With his wife, Mr. Press is a practicing Thai Buddhist. While he favors custom-made pinstripe suits, Mr. Press wears a woven bracelet blessed by a Thai monk on one wrist, and a single strand of string on the other.

“This is actually from my wife’s grandfather,” he said of the string. “It reminds you that in life, you just need enough to get along. What’s important in life isn’t what you have, but how you live.”

Some in the auto industry believe that Chrysler is hanging by a string, and that even Mr. Press’s serene self-confidence cannot save it from extinction.
He acknowledged the doubters, but said the next Chrysler comeback would prove them wrong.

“You know, I’d rather see how a company does in bad times rather than good times, and the company has come through with flying colors,” he said. “My only regret is I didn’t get here sooner.”
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