Creating new products at Chrysler Corporation, 1950 to 1997

The first step is the market plan.

In the 1950s, the automobile market was simple, as was Chrysler’s market and product plans:

Plymouth and Dodge competed with Chevrolet and Ford.

Chrysler competed with B-O-P (Buick, Oldsmobile, Pontiac).

Imperial was there (sometimes) but didn’t really compete with anybody. It was a car for dealers’ wives and their wealthy friends.

townsend and riccardoWhen Lynn Townsend took over as CEO in 1962, he articulated a revised market plan:

• Plymouth competes with Chevrolet and Ford.

• Dodge competes with Pontiac.

In 1968, I was appointed Chief Engineer and Product Planning Manager for Dodge cars. Lynn called me to his office, congratulated me, and told me to “think Pontiac.” This is not what the Dodge Dealers wanted! They wanted to compete with Chevrolet and Ford — and Plymouth.

Lynn told the Dodge dealers that they were not going to tell us how to run our business, and that if they didn’t like the Dodge franchise, to quit and get one that they did like. I was there when he told this to the Dodge National Dealer Council.

• Chrysler competes with Buick and Oldsmobile.

• Imperial struggled on. It was in the product lineup but there was no money for a merchandising plan. It had its own unique platform and body in 1957 but it wasn't profitable and soaked up technical and financial resources which the Corporation did not have. Imperial was on a road to oblivion.

While I was Director of Product Planning, we (Product Planning) tried twice to break away from this “me-too” market plan:

1. car product planning exampleOur market research studies showed that the “A” Body Valiant/Dart and “B” Body Belvedere/Coronet four door buyers had the same demographics (age, gender, income, education, etc), so we proposed that the new 1976 “F” body replace both the A and B body sedans and wagons.

That idea was rejected by Sales Management. They said that to do their job they had to have counterpoint product entries to Chevrolet and Ford — that is, they had to have both compact and intermediate models. Consequently, the 1976 F Body designs became Aspen and Volare replacements for Valiant and Dart, and the Coronet and Belvedere four door models continued in the product lineup. [Editor’s note: the B-bodies’ sales were fairly small after 1976 despite restylings and name changes, and they were eventually replaced with F-Body-based cars.]

2. early minivanIn the early and mid-1970s, our Advance Design, Advance Engineering, and Advance Product Planning offices planned and designed first generation versions of a mini-van. The program objective was to design a station wagon type vehicle that was not derived from another vehicle — not from a passenger car sedan or a commercial van.

The first generation designs were rear wheel drive because we did not have front wheel drive engines or transmissions. Product planners, designers, and engineers were enthusiastic about the mini-van (which we called a “garageable van”) concept, but were unable to get management approval to go forward with a unique product which had a special tooling bill, not including facilities, of millions of dollars. Consequently, the first designs never went beyond the clay model, advanced design and seating buck stage - but the interest in the concept in the Design and Product Planning offices at Chrysler continued.

Chrysler management didn't approve the minivan program in the early 1970s because GM and Ford didn’t have one. Top management’s contention was that, if there was a market, GM and Ford would be building one.

minivan sales

Management was, without articulating it, confirming that our product strategy was to get 15 to 20% of market segments established by GM and Ford. As Director of Product Planning for seven years, that was a painful realization to me.

In 1977, the Chrysler market and product strategy changed because it was clear that Chrysler could not succeed, or probably even survive, continuing to design and build products for markets established by GM and Ford. Chrysler management decided to add a four door subcompact to the USA product lineup. They did this by revising the new (in 1978) Chrysler European FWD C2 design (Chrysler Horizon) for build in the USA. Initially, this required purchasing FWD engines and manual transaxles from VW because Chrysler Europe did not have productive capacity for FWD powertrain components. It also required designing/tooling/building an automatic FWD transaxle in the USA because it didn't exist in Europe.

burton bouwkamp and roy axe

Lee Iacocca changes the market plan

Then, Henry Ford II got rid of two talented automobile executives. Hal Sperlich came to Chrysler in 1977 and Lee Iacocca came in 1978. These men were product savvy and provided the leadership to get Chrysler out of the graveyard spiral that they were in. With Hal and Lee onboard, Chrysler started doing its own thing.

In the product arena, Lee and Hal should get credit for the following new products:

“K” car. The design was based on FWD components.

• “K” car convertible. Lee wanted the convertible even though Sales, Manufacturing and Engineering didn't. The detail design work and the first year's production was done by Cars and Concepts - a vehicle conversion company - in Howell, MI. Demand was so great that Cars and Concepts could not meet it and we had to redesign it for in house (St. Louis Plant) build. Lee was right!

• Mini-van. Hal and Lee should get credit for the final FWD design execution of the mini-van and the decision to go ahead with the investment and production of this unique product - but not the idea.

imperial

Sometimes Lee wasn't right:

• “L” Body FWD pickup truck. We called it “Scamp.” It did not sell.

• “K” Body derived Chryslers, including New Yorker. We called them “E” Body vehicles. They did not sell in volume because they were too narrow, keeping the K-car overall width.

1981-1983 Imperial. Lee said, “How can you be in the car business without a luxury entry?” So we did a unique-skin Imperial coupe, introduced in 1981. By January 1983, we hadn’t sold 15,000 Imperials in 2 and a half years, so in January 1983, Lee said, “Kill the S.O.B.” Then he said, “Don’t bring this idea up again!”

I went to Japan in 1983 and I retired in 1987 so I lost track of the Chrysler market and product plan.

In summary, while I was there, the market plan and product plan went from “compete with GM and Ford” (1960s and 70s) to “Do our own thing under direction from Hal and Lee” (1980 until the merger with Mercedes).

The product planning process

townsend and riccardoThe CEO (Lynn Townsend, then John Riccardo, then Lee Iacocca) established the product renewal budget (money available for new model tooling). We (Product Planning) then put together a 6 to 8 year product plan that was within that budget. This plan was submitted to the CPPC (Corporate Product Planning Committee) for review and approval. The CPPC was chaired by the CEO.

The CPPC also approved the styling of a new model but that was a "rubber stamp" approval because the styling had already been approved by the ASC (Advance Styling Committee).

In the case of the unique Barracuda and Challenger door skins, this addition to the Product Plan was jointly proposed by Styling and Product Planning and then approved by the ASC and the CPPC. Styling prepared clay models with common door outers and with unique door outers to show the additional appearance distinction that unique door outers permitted.

A-bodies were marginally profitable so hitting control (financial planning) volumes and a rich carline mix was important. (We usually got $3 in price for every upgrade dollar that we put in high line and premium line vehicles.) The A body styling changes in the mid-1970s were minimal because we knew that the "F" Body Volare/Aspen would be replacing the Valiant and Dart. There is no truth to anyone blocking Plymouth Duster styling [e.g. aero rear windows] from use on other Valiants.

[With regard to the K cars:] We knew there would be 2 door and 4 door station wagon models but we did not anticipate the G-24 coupe (Daytona) or the convertible. (Both were Lee Iacocca additions.) We also did not anticipate the stretched wheelbase Chrysler and Dodge 600 ("E" Body) models. The "E" Body evolved from the success of the Plymouth and Dodge "K" cars. [More from Burton Bouwkamp]

 

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