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A spokesman for the local car services asked me, “Can you get Chrysler to make something we can use, to replace the Town Car?” So, are you looking at something in the extended wheelbase market, like the Cadillac XTS Professional?
We are looking into it now. Our fleet guys are looking into it. It’s always about volume and investment and whether that market now is shrinking. I'm not familiar with it, honestly, of what is happening in terms of market or share of the market from the town car days until today. The folks that use those vehicles are more and more getting into SUVs for example, bulletproof, that type of stuff. We’ve done a bulletproof car for the president of Italy. Beautiful Thema. Presidential car. It wasn’t a stretch or anything. It was a fully equipped and presidential car. Beautiful.
Actually, dark blue is the launch… it’s kind of a signature color for the brand. So we’ve got a 300 in the president’s house in Italy.
That’s an achievement Chrysler hasn’t had in the US.
Has it ever been Chrysler?
Harry Truman drove a Plymouth, and FDR drove a Chrysler.
Oh, it’s Harry Truman.
A convertible, right? The one he stands in…
I don’t remember. But after he retired in the 1950s, he went out and he bought a Chrysler. So he treated himself once he wasn’t a civil servant any more. But that does bring up another question, and I've been asking this question a long time. I've asked you probably a few times over the last 15 years or whatever. Where is Chrysler brand going? What is it?
It’s a brand that brought most unit sales year over year of any other brand in the company last year – ’12. It sold 94,000 more, year over year, which is the most of any other brand. The reason I bring it up is because that should be a… the best, I guess, response to what is happening with Chrysler? It’s growing year over year since we refreshed the vehicles. It’s the number one sales gainer in California of any other retailer, 200% year over year sales, which if you think of California being the imports stronghold as well as the toughest market to crack for American brands, it’s a great signature. It’s a symbol for us, you know? Number of sales, the marketing side, peoples’ reaction to where we now stand, as [having] the quality of imports [while being] made in Detroit, hence “imported from Detroit.” [That is] yet another pillar.
You know, there’s many pillars that we went after. First is, we need to be truthful of who we are as a brand and not to pretend we’re something we’re not. We’re a Detroit brand, we’re not a luxury brand, we’re a brand that gives you style, that gives you power, that gives you the amenities but we didn’t [always] give you the quality you deserve, right?
So from day one, we said, “Hey, we’re going to turn this around.” Yeah, we’re from Detroit, right? Remember the imported from Detroit campaign? And we’re darn proud of it and we’re going to show you how we’re going to fix the situation. And we followed it with Consumer Reports saying “best Chrysler in decades (with an S),” and that tells us we’re doing something right on the product side.
At the same time, we’ve made the design of our cars more sophisticated. In other words, it’s not just flashy for stunt purposes, but [more sustainable] in the marketplace, with the blossom not dying off in 12 months of launching a car. How can I sustain my presence in the marketplace from a product that has the design appeal or something beautiful, but at the same time something that could be timeless, and that people are not going to be embarrassed driving? Some people were embarrassed to drive the old 300, as an example, because of what it stood for or what it was is too flashy or too bling or too what have you.
At the same time, [we are] refining the fit and finish and the qualities of the car. Today, the Chrysler brand has a 300 with 31 mpg, leather everything, the heated-cooled cup holders, plus a touch screen, the largest in its segment, the quietest car in its segment, quieter than a Lexus LS460. I have the eight speed transmission, the one you’d find on a Rolls-Royce for $299 a month.
I don’t have a cloth interior car. It doesn’t exist. We took that out. It actually helped us in residuals, eliminated too many complications on dealers. We priced it correctly, contented correctly, refined it correctly, and we got the return, what is it, 47% year over year for the 300?
So when you look at the momentum we’ve had in sales, the reaction of people from an image perspective – when I go to LA and I'm driving a 300 and people are sticking their thumbs up and saying “Go Detroit,” that says something about what we’re doing, right? Especially if we’re delivering on the cars from a car product quality perspective, right? That’s important. It’s not just an image thing.
So we’re being truthful with ourselves, like I said, on telling people that yeah, we weren't perfect and we’ll never be perfect probably but we’re going to do something about it. We’re not going to sit and do nothing about it.
We’re making those improvements on every car we make and the sales speak for themselves, from 220,000 to 310,000 vehicles, 2011 to ’12. We didn’t have a Super Bowl ad, we didn’t have any of those things, conservative marketing funds. That tells us we’re doing something right, and with just these vehicles we’ve got which is a very small number of vehicles. We have three cars, no?
So the bottom line is for Chrysler, that we have to maintain the truthfulness of who we are as an American, non-compromise premium brand, no different than a Starbucks brand, no different than a Nike brand, that makes them accessible and at the same time have the cachet of being who they are.
Luxury doesn’t exist today. In my opinion, there’s no such thing as luxury. You can get… I was discussing it earlier, massaging seats in mainstream cars. Leathers and wheels and GPSs and everything you want. So why would I want cachet?
I wouldn’t buy that vehicle versus this vehicle because it means something for me, versus another person that means something for someone else, of buying that other brand. So if that brand has enough of a brand equity that appeals to not necessarily everybody, that stands for something.
People in America, they want to stand for something when they buy something. Because it says something, the statement, right? If I have an Apple versus a Motorola, it says something about you, who you are, versus the other person. And so it’s a matter of those brands building those images that they want to hang their head on that is authentic and truthful of who they are.
The Nike folks say hey, it’s about us. You know, you look at the Nike shoes, they’re bought by – the same shoes are bought by a kid in high school at $30. You can go buy a $30, $40 shoe from Nike. And that same $30, $40 shoe, you’d find it on the biggest Hollywood producer that makes a billion dollars a year, walking into the coolest party, with the same shoes.
Same thing with Starbucks. You walk into Starbucks and there’s a construction man that makes $15 to $20 a year, and in front of him is a lawyer who’s making $1500 to $2000 an hour buying the same product and feeling cool and proud to buy that product with a lot of cachet in it at the same price. And that’s an American thing, the accessibility and invitedness, it’s an American thing. We’re not an arrogant kind of… perspective folks versus other types of brands who hang their hat, rightfully so, to say no, I'm going to stand for this ostentatious or what have you kind of a look and so forth and so on.
People buy [luxury brands] most of the time not because of the quality, they buy them because it stands for something that that particular person wants to say, “I made it in life and I'm in your face,” you know? Chrysler brand is about humble beginnings with success stories like Detroit, like Berry Gordy, like Eminem, like John Varvatos. Those are parallel stories just like Chrysler brand and this city that we live in. So why am I trying to do something else that I'm not? You know?
Are you planning to try to move up, so to speak, going say head-to-head with Cadillac and Lexus versus going against Chevy and Toyota… where do you see Chrysler in 10 to 15 years?
I look at our volume versus their volume – not Lexus – I'm doing pretty well … right? That’s the thing is you can be – we are… I call Chrysler the bridge between exotic to mainstream. That’s what we’ve always done. The first 300 was seen as an exotic look for $20,000 right? It’s always been that way. But now we’ve taken that into everything about this car: the fit and finish, the making, the power train, how many people know? How many people – how many people know that there’s a ZF transmission, 8-speed, that only existed [before] on BMW 7 series and a Rolls-Royce?
Anybody who reads Allpar.
I'm just saying that a customer… they don’t even know what ZF means, right?
That is true.
But we’re doing it because we want to be having the best of the best. The luxury 300 has Poltrana Frau in it that exists on Ferraris, and so when you look at all these improvements in qualities, interior, exteriors, if you look underneath the 300 and you see all this carpet padding… that’s why we got to a quieter cabin than an LS 460 Lexus, no?
So we want to do the best of the best with no compromise whatsoever from a convenient content luxuries – I call them luxuries – technology, safety systems… the most of any vehicle – I think today still, since we launched it, 70 active and passive safety systems in the car. Adaptive cruise control, all those things on the car. There’s nothing that car does not have at a price that’s for people who have worked hard to earn their bucks.
That’s who we’re targeting. We’re targeting the folks that say, “You know what? I don’t need to blind my neighbor, but I will not compromise on comfort, convenient, luxury, beauty, materials and so on.” And if you go out and look at John Varvatos’ car, I can look that in front of any exotic car, and I would challenge if there is any much of a difference that would make you want to buy something else at 45,000 bucks, 43,000 bucks.
So basically in the future we’re going to see Chrysler continue to be a… I don’t want to say mainstream brand, but full range brand?
I wouldn’t say mainstream, I would say – I mean, to me, it is a mainstream brand from a volume perspective. We are not going after being a niche brand at all. You know, Apple is not a niche brand.
No, they’re a little bit more pricey sometimes but if you compare apples to apples…
You pay for those apps; you pay for those additional things depending on how much you want. Like I said, there’s a $299-a-month 300. The 300 S is $329 a month. Let’s go look at the competition and see where they start.
Let’s look at the 200. The 200 starts the same as the Avenger…
Can I just finish on the story of the mainstream piece because I want to make sure I clarify it? Because the Chrysler brand has always been an appeal to the masses – always has been. And folks who have worked hard have their own… they open their own businesses and so on. They graduate from another brand called a Dodge. And they say I want a little bit more now. They have a Chrysler brand to look at, but I don’t want to blind my neighbor because I'm not coming out of my neighborhood. I'm staying here, I'm proud of where I'm at, where I'm from. Chrysler is the answer.
At the same time, I don’t want a vanilla image. I stand for something powerful. I stand for something actually cool. If you go to LA and you say you’re from Detroit, today it’s a cool thing. I actually buy – I sell more t-shirts than I probably sell cars today with Imported from Detroit on them because people from anywhere in the country are proud of this movement and it’s turned to become a fashion statement. It’s a cool thing. That’s why Shinola is opening up and building watches in Detroit versus another place they can rent and open it up and call it Made in LA or some other… right? There’s a reason why they chose to come here to do this, because there is a cool factor after Detroit.
So the cachet in the brand has to be there. We have to stand for something that differentiates it so we’re not just anything for anyone. We stand for something and then at the same time we are the… I'm trying to find my nice words here. The alternative to the imports that pretend to be luxurious.
The 200 starts at about the same price as Avenger. Are you planning to do similar things to the Avenger to make it a bit more… what’s the word? More plus? The new 200.
We have to be – this is another part. We are in competition in the marketplace in those segments, and the D segment as you know, it’s a very competitive segment. We have to be conscience of being relevant in the marketplace.
There is a base model. I'm not objecting to the 200, per se. On the other hand, what you said about taking the base Chrysler – the 300 – and there’s no cloth seats available. There’s no stripper model, so to speak. Then you look at the 200 and there’s still the four-speed automatic hooked up to the 2.4 at the bottom.
Yeah, the segment that we’re in, in that world, the customer who… you have to be responsive to that consumer that buys these D cars, you know? Some folks, they want an A to Z… A to B car, because they have a second car at home that they use for family, whatever, leisure and so forth. And so they choose not to – and at the same time, being the size it is of a vehicle, you may not get the credit for it. I don’t know, I haven’t gone through that process yet in terms of doing what we’ve done on 300 from a payment perspective and so forth. But for sure…
So it’s basically a stopgap car, so you’re not going to get into the whole thing until the next generation?
(Chrysler rep): I think what you’re saying is for this one in this segment, that’s a price point car. But, right again, you can get the 6-speed with the same engine.
You don’t really sell very many of the 4-speeds. That’s limited to 5% as I recall?
You have to do what you've got to do in that segment to stay competitive in the marketplace. That’s kind of my overall response. No matter what it is we need to do, mix of powertrain to interior content, but without making the vehicle uncompetitive,* as was been done before. But I think the new car’s just competing in a different world.
I can’t tell you right now where I'm at, what we’re going to do with the 200. All I can tell you is that it will be an extremely competitive vehicle in the marketplace. At the same time, it’s not going to be – it’s not the 200 of today. [The segment] went up in design and quality and content, so there’s this movement in the marketplace as well, in the D segment. There’s a lot of people coming from E segment size cars to D because the D segment cars are getting also bigger, right?
So you have to take that into consideration, that that car has to stretch from people coming from E, you know? And luxuries and everything else… as well as you still have that mainstream D segment customer that you've got to attend to in many different ways. I don’t know how. you've got fleets, you've got this, you've got that, you've got all sorts of things you've got to keep in mind.
Surely fleet would be more of a Dodge thing?
You mean for the new car?
In the midsize range – I mean, not talking about the limo services.
Yeah, if we’re going to be on our own as a 200 into the future, I've got to deal with the fleet situation, no?
Well, do you? How do you separate Chrysler from Dodge? How do you delineate?
(Chrysler rep): If you remember, the five year plan shows a single replacement, not dual…
I know that we’re beating a dead horse here, but when Chrysler first came out, they didn’t compete with luxury cars. They cost a little bit more than your standard inexpensive cars, and that’s also the role the Plymouth in the 1930s and 40s played, not so much afterwards. So is that essentially where you’re trying to strike, is to give you many of the luxuries and the features that you would get in a more expensive car but at a more mainstream price?
You could qualify it that way if you want to be literal.
I like to be literal. I like to be concrete.
No, no. We have an SRT that’s almost $50,000. That’s why it’s no different than finding a Nike shoe at $500 from Air Nike or whatever it is to $30, and that’s what’s amazing about the stretch of it is there are brands that can stretch from feeding to this consumer to the completely different consumer and that’s… that’s something we have to maintain as an American brand, as a Chrysler brand.
(Chrysler rep): And the 300 is the best at that, right? With the V6 and the competitors there, the V8 on the other end, and then SRT and Varvatos at the other end?
Saad Chebad was interviewed by Marc Rozman and David Zatz on January 15, 2013.
* Saad actually said “until we don’t horrify the vehicle,” but we believe this was the intent.
Also see: 2013 Detroit Auto Show • Other interviews
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