The Chrysler Five Year Plan (November 2009)

Key Notes

You can see and hear the full presentation at the Chrysler web site.

• Sergio Marchionne pointed out that many media outlets and analysts had predicted Fiat’s death just a few years ago; and it closed 2008 with the highest profit in its history.
• Chrysler is to break even operationally in 2010; net (including capital) in 2011; and to repay TARP by 2014.
• Jeep Wrangler will continue, and get a diesel in the US and Europe.
• Hemi and (we believe) Cummins to continue, 6.4 Hemi coming with ~ 450 hp.
• Chrysler to handle large displacement and hybrid engines, as well as “all cars above C size,” for Fiat worldwide. That implies that Chrysler will engineer and build mid-sized (D) cars for export to Fiat.
• Regular and twin turbo Pentastar V6 engines.
• Dual-clutch automatics to arrive, 4-speeds and (probably) Mercedes automatic to leave.
• Journey, Caravan, Avenger: new engine, new interiors, exterior refreshing.
• Repackaging around lifestyles rather than ... whatever they were using before.
• Quality improvements will continue and extend to dealer service.
• Neither Fiat nor Chrysler can survive with expertise and products only in half the segments. This partnership is essential for both companies.

Overview

Information could not be released earlier; they needed to know they could achieve their plans. Chrysler will have full access to all Fiat designs and technologies, saving years and billions of dollars. Sergio Marchionne: “The future of Fiat’s car business and of Chrysler are now inextricably intertwined.” The plan assumes that 270,000 cars will be made by Chrysler for Fiat, a serious commitment. Fiat is giving Chrysler responsibility for all its large vehicles “over C size.” The two companies together can cover every market segment.

Chrysler Engineering will be expanded from June 2009 to July 2010, with contract workers doubled, a 7% increase in direct employees, and a doubling of purchased engineering services. Chrysler will be a global center of expertise for hybrid and large displacement engines. Fiat, which has partnered with Cummins in the past, will be a global center of excellence for diesels.

Powertrain

Fiat technologies, including smaller turbo engines, MultiAir, start/stop systems, and direct injection will be added rapidly. The four-cylinder World Engines will gain MultiAir and direct injection, as will the Pentastar V6. Fiat’s dual-clutch transmission will be used by Chrysler. Pentastar V6 will launch in May 2010. A twin turbo version of the Pentastar V6 will be launched as will a single-turbo version. V8 efficiency will be increased. Start-stop (engine shutoff at idle) will be applied to the Jeep Wrangler diesel starting Q4 2010 — which indicates there will be a Wrangler diesel — and will be moved to other engines afterwards. A new 6.4 liter Hemi will join the 5.7 liter Hemi with around 450 hp. Chrysler estimates that V6 engines will drop from 54% to 37% of product mix by 2014 with four-cylinders going from 19% to 38% and diesel from 9% to 14% (V8 from 18% to 11%). Cummins diesels appear to be staying (we also wanted someone to ask about this but nobody did.)

Electric vehicles will be centered at Chrysler, with a hybrid minivan in 2011, and full electric in 2012 (“light commercial” vehicle). The “unmarketable” Dodge Circuit is presumably dead and other plans have been scaled back; Envi is being folded into the standard vehicle development process.

The four speed automatic will be phased out, the six-speed improved, and the Fiat C635 dual clutch will be phased in progressively. New ZF axles will be made in Marysville starting in Q2 2010. New automatics for rear-drive cars are being sought. The dual-clutch system will debut on the D-segment (midsized) car at the end of 2010, and should cut fuel use by 10%.

Product plan overall

Joe Veltri said it’s the most extensive change in Chrysler’s history. The product planning process starts with identifying market trends and opportunities, aligning them with the four brands, determined optimal use for each platform, ensured they could stay within the capital plan, and ensured market support at all steps of the product lifecycle. Even the vehicles based on Fiats will be engineered by Chrysler people to meet Chrysler needs. Some other vehicles in the plan will still be built by Fiat.

Product spending is to average $4.5 billion per year with $23 billion overall (Capex of $15 billion).

56% of sales made in 2014 are projected to be based on Fiat designs. The engine mix is expected to be 14% diesel (up from 9% now), 38% four-cylinder, 37% six-cylinder, and 11% 8-cylinder (down from 18%). The large and full size market is expected to fall from 55% to 42% by 2014.

Multi-Air provides shot-by-shot control of air, providing a fast response with continuously variable valve lift. It is an add-on package to base engines, for low impact to existing production lines.

Jeep

At Jeep, Grand Cherokee leads. Compass and Patriot are having new exteriors for 2010, Wrangler will “retain its rightful spot as the icon for this legendary brand.” Exterior styling will be modified and a dramatic new interior will be put in; a new powertrain will go in for 2011. 2011 is Jeep’s 70th anniversary and special editions will be made for each model. In 2013 Patriot, Compass, and Liberty will be replaced by vehicles “developed from Fiat platforms” which we are promised will still have the Jeep DNA — small SUV, C-size SUV, Liberty replacement.

Jeep is aiming to double its global sales from 2008 numbers, and its leader, Mike Manley, wants to take it “back to its rightful place of being the global SUV brand.” Jeep was apparently the largest SUV brand in the world through 1990 and today is #6 in the world. Their largest group of owners is “Dreamers,” time constrained by family and work, but wanting authentic gear for the time they’ll be able to “do more and dream less.” The new campaign is “i live. i ride. i am. Jeep.” (e.e. cummings joke goes here.) The plan is to re-establish the brand with a new look, feel, and attitude; renew the customer-brand connection with lifestyle engagement; and deliver a clear call to sales action.

Wrangler remains the anchor of the Jeep brand and will be refreshed in both 2010 and its 70th anniversary, 2011. There will be new derivatives and special models based on the Wrangler.

Jeep Liberty will move to a Fiat platform in 2013.

Diesels should be available on all the Jeeps in the US since they are all sold in Europe where vehicles generally must have diesel options. Whether they sell in the US is another question.

Core Jeep customers were truck-based, wanting capability and 4WD. Expanded SUV customers want unibody vehicles, fuel efficient, with on-road dynamics. The shift from truck to car based SUVs is growing. All Jeeps must have certain aspects (grille, short overhang, trapezoid wheel-arches, functional interior, open-air concepts, visibility, durable materails, handling in bad weather, advanced four wheel drive, and towing capacity.) Jeep Wrangler must also have excellent off-road characteristics but it appears that off-roadworthiness will not be demanded of all Jeeps.

Chrysler

PT Cruiser is dropped after 2010. Sebring and Town & Country are almost completely redone in 2010 with significant upgrades and exterior changes, with new powertrains, just like Avenger and Caravan. 300C will have substantial powertrain and interior upgrades with a new interior. Sebring will have better handling, ride, and driving dynamics.

Chrysler is set to be a formidable player in small and midsized cars with a new compact in 2012 (Fiat based), a new D-segment sedan and CUV in 2013 (Fiat derived), and a new B-car in 2013 or earlier, imported directly from Fiat. 2014 will see a brand new Town & Country.

CEO Olivier Francois. “Why would a Frenchman who works for an Italian company work for an American company in Michigan?” (His question.) Sometimes distance gives perspective. “The pathway is passion. ... to make hearts race with every glance. It is an American sensation.” (He went on for a while like this.) “A visit to the Chrysler museum is such an experience.” 

Lancia was in a similar condition as Chrysler when he came. He started with a 4% market in Italy with six nameplates, in 2009 at 4.8% with four nameplates. Lancia focused on three basics, product, marketing, and network. In the US, Chrysler has five nameplates with total 1.8% share, looking for 3.4% share with more nameplates by 2014. “It’s about 84 years of history.” Comfort, performance, styling, innovation, quality, value, efficiency. Walter P. Chrysler: “I gave the public quality, beauty, speed, comfort, style, and power, all at a low price.” Quality, value, and efficiency require hard work but the rest is also needed for Chrysler. New ads: “It’s time to reignite the American dream. Let’s make cars people want to make out it. Cars people want to have their photos taken in. It’s time, once again, for America to arrive in style.”

Coming in Q1 2010: 300 Sport edition, Town & Country Fashion Edition, PT Cruiser Final Edition, Sebring Ocean Edition. This indicates the PT Cruiser will not continue past 2010 after all. Coming in Q4 2010: reshape the Sebring and refresh Town & Country.

Chrysler’s ambition is to be distinctive at all these levels. The new attributes must be established. Refined, balanced performance, provocative styling, intuitive innovation, craftsmanship, pride/value, efficiency — responsibility as well as mileage. We need to expand the portfolio, improve quality, create exciting designs.

Chrysler’s ambition is being different, remembered, and aspirational, not mimicking another automaker; and having an integrated image across the board, products, merchandising, showrooms, auto shows, advertising, catalogs, web sites. Everything must reflect aspiration. Brochures should be aspirational and elegant. 40 million visits so far to chrysler.com — “Paradise or Hell for our brand image?” — no brand image on the existing site; a new site goes live in a few days. It will set a new tone for the brand. New showrooms coming, too. New car show displays are on their way. New catalogs are done. New product is coming. New advertising is coming. “We have done this in one month but the bigger work is to be done.”

Mainstream shows and events are expensive but have low visibility. It is time to find new methods. It is time to present new vehicles like models on a runway, not a highway. There's also a new logo. Brand equity must be increased. Chrysler will stand one notch above everyone else. Chrysler will however also have B, C, and D segment cars as well as the CUV.

Ram brand

The new TV ads say, “My name is Ram” and repeats “My tank is full” numerous times. The presentation called up the Dodge Brothers as part of the “proud bloodline of Ram.” They showed the “big rig” 1993 models. The Ram brand will indeed separate from Dodge beyond “Dodge Ram.”

The company expects sales to go to 415,000 units in 2014 from 280,000 in 2010, with a possible expansion to heavy trucks (18-wheelers) and the use of both small and large Fiat commercial vans in 2012. (Both moves would hurt Daimler which sells Sprinter vans and owns the truck company formerly known as Freightliner.) A unibody midsized light-duty truck is under consideration for 2011 launch, replacing the Dakota (possibly with the same name). The heavy duty pickup, light duty pickup, and chassis cab are all scheduled for a 2012 refresh, very soon given the 2010 introduction of the chassis cabs. Allpar note: Ram will get the old Dodge logo, Dodge will get a new logo.

The small commercial van will simply be imported from Fiat, while the large commercial van will be based on a Fiat design but made by Ram with their engineering (based on the chart legend). Each truck series will get new powertrain, technology, and capability upgrades in 2012 along with the possibility of a light duty diesel for Ram 1500. The unibody pickup was designed to be a true game-changer; “stay tuned.”

Dodge

The plan is for a complete repackaging of all Dodge cars, with new options mixes, by the end of the fourth quarter of 2009. A complete overhaul of branding, marketing, positioning, and point of sale is to be completed by the end second quarter of 2010. The car and truck brands are being separated to “amplify the youthfulness of the Dodge brand.”

Trim lines will be changed to match lifestyles, with groupings such as sweet/simple; fun/practical; uptown/luxury; thrill-seeker; cool/extrovert; and SRT, ultimate-performance. SRT will continue as the “ultimate performance sport” level.

Coming up in Q4 2010 will be revised Avenger, Journey, and Caravan. All will get a new interior and engine, refreshed exterior, and repackaging; lower noise and harshness levels, higher performance and gas mileage. Caravan will get best in class ride and handling, comfort, features, performance, and fuel economy. Charger will be all new and dramatically styled, with a class-leading interior, and best-in-class performance and gas mileage.

Current Dodge cars will undergo a "fix the fundamentals" program, retuning the driving experiencing and adding technology for more efficiency and performance. Dodge will get a C-segment sedan, finally replacing the Neon; a B-segment hatchback, a new mid-sized sedan, and a seven-passenger crossover by 2015. The B-car would be from Fiat; the C (Neon-sized) and D (Avenger-sized) will be Fiats; the crossover will be a Chrysler design.

Caliber ends in 2012, and a Fiat compact sedan takes over in 2012; Avenger stops in 2013, replaced by a same-name Fiat mid-size; a new small hatchback from Fiat starts in 2013; Journey gets redesigned in 2010 and continues through 2014; Nitro may be continued (unknown); Viper stops after another 500 units, then might restart in 2012 (it might show up on a Fiat platform - presumably Maserati or Ferrari and possibly using that twin-turbo Pentastar V6). Challenger gets refreshed for 2011 and continues at least through 2014. Grand Caravan gets redesigned in 2014, refreshed in 2010. Full sized CUV starts 2010.

The company plans to make Dodge more refined, but retain its appeal to younger people.

Dodge has the widest range of vehicles. Details: Nitro is under consideration for 2011 and beyond. Dodge updates have already been discussed for the most part. The B-car will be a direct import (“but designed to be a true Dodge”), the C and D cars will have Chrysler engineering based on Fiat designs.

Fiat brand and Alfa Romeo

Three Fiat branded products will be sold, all Fiat 500 models - Abarth, Cabrio, and 500. This is in line with rumor and speculation. Around 70,000 Alfas are expected to be sold in the US per year, coming from Chrysler factories and benefitting both companies. Marchionne said if he felt Alfa was hurting Chrysler, he would not let them sell in the US. Fiat 500 will start selling in January 2011.

Dealers

Dealer network productivity is to be increased, with redefined dealer standards. Chrysler went from 21% of dealers to 12% in the US, losing 2,831 dealers in the last 19 years. Project Genesis is continuing as planned, to increase franchise attractiveness, profits, and throughput, providing a sound base for reinvestment. Full implementation is due for 2011. At the moment, Chrysler has around 440 sales per dealer in metro areas; the goal is for them to go up over 700. Tight credit is a serious problem especially for dealers — and Chrysler dealers tend to sell fewer cars per month than competitors. New dealer financing will replace Chrysler Financial by December.

Just 36% of dealers have a return on sales greater than 1.5%; they expect this to increase to 60% by 2014. Dealer support is being expanded to include financial skills. Planned growth of commercial vehicle sales will require overcoming strong competition and changing service hours to meet business owners’ needs. In general, dealers need to overcome problems of high land cost, and customer convenience (old or suboptimal locations).

A green facility initiative is planned to both increase environmental friendliness, and to cut costs.

A North American version of the Fiat 500 is expected to increase foot traffic and new customers. It will mainly be sold in key metro areas with specific interior showroom branded salons, and a high degree of customization through accessories. The 500 will have dedicated sales and service staff.

Since June 10, dealers have committed over $250 million in capital investment, with 20 new buildings, 200 major renovations.

Fiat has an established set of dealership standards and methods which was already rolled out to Chrysler dealerships. 61 training sessions were held in 55 days for over 5,200 people already. The standards cover customer cdare, sales, post-sales, and management, and are being phased in through 2012, with continuous improvement required. While Chrysler had implemented similar moves in 1997, they were dropped after the Daimler acquisition. A team of 150 people is committed to increasing dealership performance, including in service. Over $120 million is being invested in 2010 — $500 million over five years.

Mopar: parts and service

CEO Pietro Gorlier. Mopar continues to look into other channels including wholesale retail, independent repair shops, and collision parts with a price matching program. Mopar has been adding techs and service advisors, and developing an “express lane” system for immediate service on their car, as well as adding a market-driven smart pricing program. Accessories are now being designed during vehicle development, engineered to ease installation, with availability at vehicle launch.

The goal is for 80% of dealers to have weekend and extended hours for service. A new wiTech (wireless) diagnostic system is being added, with new wiring diagram applications (the first dynamic wiring information system, a design driven by technicians and using vehicle-specific on-demand information). The parts network reorganization should save 13% of trips. A wave of actions started in June 2009 to improve parts distribution logistics.

2009: fix the basics; 2010: target industry benchmarks, enforce dealer standards; by 2012, become best-practice so customers view the service organization as an asset.

Quality of customer care drivers: brand-customer interface (product, customer care center); dealer-customer interface (sales, service, parts/accessory experiences). Rigorous key performance indicator process needed to drive success, excellence can only be achieved when everything exceeds customer expectations. There must be proactive customer support and a closed-loop approach with follow through. (This echoes the old Five Star program as it was originally designed.)

A single U.S. toll free number will be created for each brand, Chrysler, Dodge, Jeep, and Ram, to customize the owner experience - 800 CHRYSLER, 877-I-AM_Jeep, 800-4aDodge, and 877-RAM-5720.

Manufacturing and supply chain

(These changes are already being implemented and numerous before/after photos were shown.) Safety will be improved with metrics considering “near misses” as well as serious injuries. “World Class Manufacturing” is designed to cut costs and increase quality. Workstations will be redesigned to improve ergonomics and prevent injuries, back problems, and other issues. More just-in-time delivery systems will be used, with material delivered to the point of use and less operator walk time. Machines are being cleaned and restored to their original state, allowing for easy inspections of their status (e.g. seeing leaks), and work conditions, including lighting and flooring, are being improved. Chrysler once again involves workers in planning.

Supply chain optimization is being discussed by Dan Knott, head of purchasing, but the same words have been used before. Apparently Chrysler is slated to buy $28 billion of components in 2010, Fiat $40 billion; Chrysler’s purchasing power will increase. The number of unique suppliers is now 48%; by 2014 that will be 35 or less% (estimated). A new organizational structure is being set up which reflects Fiat’s, with, for example, Chassis and Itterior, Commodity, etc being replaced by Metallic, Mechanical, Services, etc. Regional sourcing offices in Italy, Austria, India, China, and Korea will leverage Fiat’s international strengths. There will be weekly synergy meetings, aligned teams, and shared strategies for commodities and major suppliers. Parts will be commoditized where possible. There will be regular top-level supplier meetings, an expanded supplier advisory council, regular communication, accelerated processes for supplier claims, and a new group to optimize inventory.

Supplier quality is now part of the Purchasing organization, with 80 new experts (a 45% increase) by 2010, increased engagement with suppliers, and better validation of supplier products and processes.

Supplier costs savings are being returned. The old Chrysler plan (SCORE) of splitting cost savings from supplier ideas is being brought back, with Chrysler and supplier each getting 50% of the savings. This resulted in billions of dollars in savings when implemented in the 1990s.

Engineering “miscellaneous.”

Vehicle development (engineering). Future projects will use more resources up front, fewer at the end, and will bring vehicles to market within 16 months. A new benchmarking process establishes 320 functional measurements and benchmarks the best competition — similar to the pre-Daimler process but more detailed, with targets set and physical achievement confirmed as the project continues. Results will be confirmed by a new quality group representing the customer rather by the involved engineers. Gas mileage will be increased by cutting weight and improving aerodynamics (the Ram was cited for its best in class aerodynamics.) Time to market will be cut as the S0 build phase is dropped, due to the use of virtual tools and prototypes. More parallel activities will cut time, too. A disciplined design freeze should reduce time to market, as will early supplier involvement — a hallmark of Chrysler’s own renaissance of the 1990s.

Sharing. Increased sharing with Fiat will result in increased quality (due to use of tested components), decreased cost and time to market. The primary sharing will be in modules/systems, followed by powertrain (with V6 engines from Chrysler and four-cylinders from Fiat), and then by components. 20-30% of vehicle cost will be in model/brand differentiated components. Chrysler’s new Powernet electrical architecture will be used for E-class vehicles, Fiat’s for C/D vehicles.

CATIA. Chrysler will start using a proprietary automated computer technology for structure optimization (it is currently using CATIA). Alternate materials such as high-strength steel, aluminum, and magnesium will be used for weight reduction.

Quality

Doug Betts said that Chrysler was not effectively organized, and that new launches had below average quality. Action was taken starting in late 2007. Changing corporate monthly meetings from boardroom style to hands-on style started in March 2008 to show leaders the issues. Merging all quality functions into one organization was completed early this year. 200 people are now working together on one master plan. Internal metrics and targets were changed to more accurate figures, as of January 2008; cross-functional warranty reduction teams were set up by January 2008. Reliability fell in model-year 2007 but has recovered. 200 plant engineers were added to help with quality issues. Reliance on JD Power SSI/CSI based surveys has been replaced with the Customer Promoter Survey which is faster and has more clarity (as of January 2009).

Cross functional teams were deployed for this vehicle in January 2008. Reliability shot up shortly afterwards.

New quality initiatives include improving quality of service parts (redesigning them to fix original issues), thereby reducing repeat repairs; fixing service issues by making parts more readily available, having more tools at the dealerships, and having technqiues to fix every problem, with new metrics; and improved human interactions at the dealer, with care standards, a score system, and better customer feedback.

New vehicle quality has been addressed with more rigorous testing starting with the 2009 Ram which has garnered better results from Consumer Reports; through better benchmarking and higher internal standards; and through investigation of the determinors of perceived quality. Quality design simulations are being done before physical models, with the ability to simulate real vehicles and lighting, allowing for the identification of perception issues (such as exposed hardware in the wheel-wells) before a prototype is built.

Financials

Expectations are for units sold to more than double from 1.3 million in 2009 to 2.8 million in 2014. All brands are seen as growing, particularly Jeep and Chrysler (which sell fewer vehicles now, and are projected to double their sales). US market share is expected to go from less than 9% in 2009 to over 13% in 2014. Dodge is focused on repositioning rather than growth. Retail expense per unit will double to support the repositioning of the brands. Chrysler is to break even by 2010 (operational) and by 2011 (net). All loans are to be paid by the end of 2014. Product spending is to average $4.5 billion per year with $23 billion overall (Capex of $15 billion). There would still be $2 billion of DoE debt at the end of 2014. $2.3 billion in loans have not been drawn. Shipments are to be adjusted by 600,000 vehicles per year partly by restocking dealers and partly by resuming fleet sales.

The cash low point is in 2011 due to product spending and lower U.S. volumes. An IPO will be decided by the Board and Members but is unlikely to occur before 2011. Not paying accelerated TARP repayments would prevent a cash crisis if there are problems at this time. A lower breakeven helps cost containment. At the end of 2009 Chrysler will have $7 billion of cash and undrawn facilities. It is not below $5 billion even in stress-tested scenarios.

Profitability figures are based on conservative estimates. Market share is projected as going up so that there are 2 million units of share by 2014, with recaptured market share from the last few years, returning to a bit less than 11%. International sales are to grow and dependence on U.S. fleet sales are to be cut from 15% to 12% even as commercial truck sales rise. Reliance on large vehicles is to fall with micro and small vehicles being added.

Chrysler had $5.7 billion in cash at end of September.

International sales

Most of the international outlets are joined with Daimler. Sales will be integrated into the Fiat organization in Latin America and Europe to provide full support. In Asia, Chrysler has been more self sufficient and will provide its distribution structure to Fiat.

Jeep will be expanded in international market. Chrysler and Dodge have been spread thinly. In the future, a global portfolio of vehicles will cover 2/3 of global market segments with powertrains that reflect international demand. There will be B and C segment hatchbacks, minivans, and CUVs for Dodge and Chrysler, which will dovetail with Jeep vehicles. The goal is for 500,000 sales/year, up from 144,000. All of the Chrysler global product portfolio will be refreshed by 2012, with half derived from Fiat platforms by 2014.

Both Lancia and Chrysler have similar problems, including incomplete portfolios, limited distribution, low brand recognition. The alliance can selectively used either the Lancia or Chrysler brand in any given market for a better focus — with a full market portfolio in each market. The Dodge and Ram brands will continue in appropriate markets as regional or niche brands. Chrysler models will be offered to Fiat for distribution under Fiat brands to give Chrysler access to more volume. Chrysler Australia will move to Iveco.

Financial services are already moving from Daimler.

Jeep expansion will include five global models.

Dodge was brought out in 2006 with Caliber, Avenger, Nitro, and (later) Journey. 2007 was the best year ever with 240,000 units and 2008 was doing well before the market collapse. 30% of volume for 2008 was Dodge, 29% Chrysler, 42% Jeep. Profitability has been an issue with Dodge adding volume but not profitability and Chrysler has had profits squeezed by competition. Most national sales companies are integrated with Daimler at this time. Latin America is the largest share, then Europe, then Asia. “Three brands, but little volume.” Market share is little over 1%. Fiat has a strong distribution structure with 3 million vehicles in Latin America vs Chrysler's 45,000 and they have a full infrastructure. In Europe, Fiat has over 10 times the volume. In Asia, the businesses are similarly sized but Fiat has more partners.

Chrysler does not compete in the A, B, or C segments where half of international trade is. It does compete well as a niche manufacturer but there are problems going forward even with this model.

Canada

Reid Bigland, CEO of Chrysler Canada, which has three plants (Windsor, Brampton, Etobicoke), three regional sales offices, three parts facilities, and one headquarters. Around 3% of Chrysler sales come from Canada, and around 30% of Chrysler vehicles come from Canada. (Allpar note: Chrysler has been strong in Canada with a higher market share than in the US.) Chrysler Canada’s market share was around 13% for numerous years, but has fallen in 2009 with a forecast of 11-11.5%. (The share was 17% in 1999 and 2000). Chrysler was on a roll in 2007, gaining more market share than any of the competitors, and had two of the top five best sellers in the country. The 2008 crises put an end to the gains. (Chrysler Canada did not file for bankruptcy.)

Canadian sales is dominated by small and compact vehicles (39%), pickups (17%), and people movers (14%) - that’s 70% of the market. Midsized sedans are just 11%. 83% of vehicles sold in Canada have four cylinders. There are clearly opportunities for Fiat Group-based vehicles.

Chrysler still has a 70% market share in Canadian minivans, got a 2009 J.D. Power most dependable award (three-year reliability), has best gas mileage; best selling minivan in Canada throughout its life. Journey remains the best selling crossover (out of 39 vehicles). It’s the top pick for IIHS.

In Canada, Chrysler has 440 dealers, all selling vehicles from each brand; 88% are profitable, with a 25% return on investment (figures are September 2009 YTD.) Five new dealerships were announced or opened in the past 30 days and existing dealers can invest in their facilities. Canada has gone from around 490 dealers in 2004 to 440 in 2009. The goal is to return to 13.8% market share.

Mexico

Joseph Chamasrour, CEO of Chrysler Mexico: 150 dealers, all selling all Chrysler brands... and Mitsubishi, since Chrysler is the distributor in Mexico for Mitsubishi. Customers are satisfied with the brands according to J.D. Power (except Chrysler brand which is #14 of 17 manufacturers). Mitsu satisfaction is #5, Jeep #6, Dodge #7. Most dealers are profitable. Over 95% of the vehicles sold are Jeep and Dodge (excluding Mitsu.)

Chrysler has been gaining in the Mexican market by .5% while Volkswagen, Nissan, Ford, and GM have all fallen. Free trade agreements opened Mexico to numerous new brands - there are now 333 nameplates in Mexico, up from 240, and 52 brands, up from 41 in 2003. Chrysler market share has swung up and down from 9% to 11.8% through 2009.

The Mexican market is 55% pasenger cars, 15% SUVs, 20% trucks, 10% minivans/sport tourers. Chrylser was #4 in 2006, #1 in 2007, #2 in 2008, and so far is #2 in 2009 despite a three month factory shutdown. Journey is #1 in its segment. Chrysler has a 33.6% share of the minivan/sport tourer segment this year up from 28.4% last year. Journey has double the sales of its nearest competitor. Dodge has had five years of growth in truck market share with a #1 award for Dakota by J.D. Power in 2009; and current share of 27.5%, #2 in the market (up from 12% in 2004). Passenger cars are a key challenge with share dropping from 8% in 2006 to 5% YTD in 2009 - a steady decline.

Q&A period

Nobody asked about the 200C! though an interior shot was in the Chrysler slides (see above).

• You can see and hear the full
  presentation at the Chrysler web site.

  Chrysler has not paid anything to Fiat.
• LX and minivans will remain where they are; the C and D production location will have to be determined.
• “You need to be proud. One of the things that bothers me is that it appears to be a sport... of beating of people who are down. ... I did this because I believe in the company.”
• “If it’s any comfort to you, I lived through exactly the same thing with Fiat.” They had to clean up the distribution system, eliminate excessive discounting, and live with a temporary loss of sales.
• One reason why sales are so down is because Chrysler has been very quiet for months, with very little information coming out of Chrysler and very little marketing. One ambition is for the Chrysler name to be front line and center in the news.
• Product development cannot be made faster. “There is no more energy in the system.”
• The dealer network is making money now.
• A question about jobs was partly dodged, with a side note that Chrysler no longer owns all the plants involved and that considerable thought would have to be given to where vehicles are produced.
• Electrification of vehicles: commercial vehicles is the first opportunity. Plans are still being developed. Around 1%-2% of volume is expected to be electric at this point. The small Fiat van is in the process of being electrified.
• Automakers had problems because they were selling cars at a loss to sell car loans at a profit. This is not sustainable. The financing side is now separate.
• Jeeps will be sold with diesels in the US because they will be sold with diesels in Europe.
• Companies cannot survive with one or two vehicles on a single platform. The 300 development costs “would shock you out of your pants.” 
• The volume numbers are conservative, in their opinion.
• One key to the quick launches is to get suppliers in as early as possible (allpar note: the mid-1990s Chrysler said the same thing).
• Alfa Romeo is set up for 70,000 vehicles but the Alfas won’t make a material difference to Chrysler’s health. If Chrysler’s interests are not served, Alfa will be kicked out.
• Chrysler can deal with cash shortages, if needed, by restricting discretionary spending.

Also see Fiat Cars and the Chrysler-Fiat Alliance

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