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Chrysler and Mercedes Engineering:
From Best Practices in the 1990s to Behind the Curve in the 2000s

small car development team

The PL (Neon) was started out of the AMTech replacement for the Renault Alliance, which had been created by AMC, based on a Renault design. When Chrysler bought AMC, the PL people, who came from the old L-body (Omni and Horizon) group in Highland Park, merged with those AMC guys, and the idea was changed from a “square” two box car to a much more modern three-box design that styling leader Tom Gale’s guys had penned.

The Neon was Lee Iacocca’s answer to the statement that American auto manufacturers could not build anything decent to compete against Japanese cars (one of the engineering offices had a red “COUNTERATTACK” banner). It was to show just what Chrysler could do (what all of Chrysler could do, not that the fights between ex-AMC and ex-Chrysler guys had slowed down at the time). Lightweight, fuel sipping, powerful, comfortable in an American manner, yet to cost no more than a bit under $4,000 to build, with a retail sales price of no more than $8,000.

counterattack; the Neon development team

The original Neon, unlike its predecessors and many competitors, was profitable. At the end of the first generation’s production, Chrysler was still making over $1,000 per car sold, including rebates and warranty costs. This was one of the reasons there was an $8 to $10 billion “war chest” for Daimler to plunder. Chrysler had the manufacturing and engineering process integration down, and was pushing the envelope of what could be done, in the shortest amount of time, farther and faster than any other automaker in the world.

While the retail price at launch ended up at around $9,000, with inflation over 38 months, this was not considered a failure. The Neon passed all its crash testing with minimal rework. This is not to say it was perfect, but it did pass well.

Fuel economy, even with the high powered ACR engine, was better than cars with similar horsepower ratings from the Japanese manufacturers [there were not many of these; the primary one, Civic, had 125 hp and 100 lb-ft of torque in its top engine, vs 132 and 129 in Neon]. The ACR version of the Neon, advertised in the general press only in its first year of availability (this does not count Grassroots), continued to win its class, until it had dominated so heavily that the SCCA started allowing (in my opinion) questionable add-ons for other cars.

Unfortunately, Eaton replaced Iacocca before the launch of the Neon, and demanded several changes that were the undoing of the car, including the exhaust donut and head gasket. About $2 saved per vehicle (over $2,000,000 total), but more was lost in customer value. [Long term, warranty costs were at least a hundred times higher than the initial savings.]

The LH (Intrepid/Concorde/Vision) was already under way (it came out two years earlier than Neon) and by the time Neon was being finished up, studies were being done by Tom Gale’s people on the LH second generation replacement. The cab forward styling was to be implemented more aggressively for the LH stage 2 (1998 cars), so the JA (Stratus/Cirrus/Breeze) was to preview the second generation LH styling, which was given high marks by public testing clinics in late 1991, 1992, and 1993.

When JA was released, it was selling at almost twice the projected rate and Sterling Heights Assembly was hard pressed to keep up [it did not sell as well as the Spirit/Acclaim, but made a good profit and had critical acclaim]. Eaton’s crew was overjoyed and decided to start extra cost cutting on this car also, since the Neon had already saved $2 million+ for the company (this was before the hit from the major failures). It was felt that JA could be distinguished enough to be able to offer a version of JA for each of the three car divisions, and have minimal cross shopping. At the time, the car buff mags agreed and so did the buying public.

first Neon prototype

Chrysler was on a roll......

Then came 1998. And we all know what happened then. All programs were stopped for review and reconsideration.

1998, the year of the “merger of equals.”

In 1998, the Neon was in its second generation (in engineering), the JA was almost ready to be “put to bed,” and the LH third generation—the LX— was almost ready to be design-concept frozen.

“Floridaman2013” wrote: The Boston Chrysler Zone brought a Neon out to the dealers in our area to teach/drive/familiarize with before they shipped to dealers back in Feb/March 1994. We thought it was small but roomy, plenty of pep for a small car and handled real well. Price was outstanding and competitive with the rest of the market. Whoever came up with the idea to bring out the product to the dealers early for their opinions and to fix/redesign before hitting the open market was very smart.

Sales and service is where the rubber hits the road, as Lee Iacocca told us back in 1980-84. He made design teams sit with engineers and maintenance to design vehicles that were easy to service, cut down warranty time, and simple to repair. The 1981 Reliant/Aries was so simple under the hood, except for the new feedback fuel system, it was refreshing.

Although billed as a “merger of equals,” there was almost immediate infighting between the transferees and the hometown boys. In a few areas, arrogance was replaced by an admirable level of competence, but the general reaction of the Germans was to look down their noses at the “less capable” Americans’ efforts to design a mass market vehicle. (I was consulting with the Technical Computing Center — the IT group of Vehicle Engineering at the time) [Different people seem to have had different experiences; Burke Brown, who led LX development, had a very different view and felt that the Daimler people were open and cooperative.]

Dieter Zetche and Wolfgang Bernhard were not of one mind on this with the rest of the German staff. Zetsche came in after the initial “uber leader” was transferred to Freightliner to “clean up that mess” and he brought Wolfgang with him to play good cop/bad cop in “straightening out Chrysler.”

Although the popular press had ignored the warnings, internal people knew that Chrysler was heading for a massive outlay of warranty expenses due to the cost cutting done and enforced by Bob Eaton’s crew. PL, JA, and LH were all plagued by parts problems in air conditioning, power steering racks, transmissions, head gaskets, and other areas, that were starting to show up on a large scale. Engineering scrambled to fix the issues, but with the budget constraints imposed by the Eaton crowd, and later by Daimler, little more than band aids could be applied. The trickle of people getting fed up turned into a river.

The 1994 Dodge Ram (BR) was all digital. There was no reason for clay models. From the start of the program at JTE we worked strictly in CATIA with 3D surfacing and solids; no clay was required, as CATIA built exact models in full scale of the panels and structure. The first article body shells (consisting of the complete body, bed, and all closures and structures) were directly cut from the 3D math data. From the first panel to the completion, every piece fit properly. This was the first time ever that this had been done in the world by any manufacturer, for any product — even Dassault said it could not be done. — Bob Sheaves

In view of all these “insurmountable problems,” the Germans instituted several policies that lead directly to the implementation of poor decisions, poor design approvals, and most importantly, poor quality and durability.

In came “quality gates” and forced direction.

It became apparent that there was a fundamental difference in the manner of people at Chrysler and those of Daimler (note-I am not saying “Mercedes” for a reason. Mercedes was a unit of DCX, as was Chrysler). On the positive side for Chrysler (this is before the “merger”):

  1. Integration. Engineering, manufacturing, and design (styling) were tightly integrated, leading to very fast turnaround times for a new product. The Dodge Durango was done in 18 months from approval to production. PT Cruiser was done in 24 months, which led to the first major conflict — more on that later.
  2. Purchasing was subservient to engineering, although the approval process to bypass purchasing selection and override it by Engineering was complex and slowed the design process tremendously.
  3. Chrysler styling, under Tom Gale, had achieved the type of approval from the marketplace that had not been seen since Bill Mitchell of GM. Gale could do no wrong and each product garnered more approval for the styling in each successive car. All were on target for exactly what the customer wanted, and the customers responded by putting their collective money where their eyes were.

The downside of this process by Chrysler:

  1. Shooting from the hip. Many changes were made and approved at a low level of management. This could have worked fine—because the person designing and engineering the part knew the most about theory. The problem was one of experience. Because the corporation had expanded greatly in responsibilities for the individual engineering staffs, people without the necessary experience to judge values and performance were promoted beyond their capabilities, and quality suffered from focus on price over functionality. This shooting from the hip was required due to the pace of the process. When a decision had to be made, Bob Lutz impressed on the corporation that it was to be made then, not after endless consultations with others to build a consensus, which slowed development.
  2. Concentration on “cost to the corporation,” not “value to the customer.” Under Eaton, engineering approvals were often stopped in their tracks when Purchasing went to upper management with the complaint (paraphrased here) “Engineering is wasting money on unnecessary items.”

    The air conditioning fiasco in the LH is a perfect example of this. Engineering specified a system capable of cooling and heating an interior that contained much more glass, due to the cab-forward design, to provide the coldest possible cooling and highest heat in under 5 minutes of engine run time. This required a system capable of cooling at, as I remember, an extra 12,000BTU/hr over the comparable GM, Toyota, Honda, and Ford systems, which were used as a basis for cost comparison. As this example was related to me, Purchasing carefully left the extra glass out of their analysis. They concentrated on a strict cost comparison and ignored performance. We all know the end results of that little argument and decision. [While air conditioning performance was generally viewed as satisfactory, the units tended to have a limited lifespan.]

The positive side of Daimler (in perceptions from this side of the pond):

  1. Mercedes had the reputation of building vehicles which regularly went 250,000 miles and more, could handle climatic conditions far in excess of domestics, and stayed together without rinky tink parts falling off. The epitome of Mercedes was, from Chrysler’s standpoint, the venerable W126 body, which was used for everything from million mile taxis in the Mideast, to the top of the line luxury cars in the EU and Americas. Chrysler needed to have an MB 220D type vehicle to outdo the Valiant as “everyman’s car.” [Editor’s note: the Mercedes of the late 1990s was not the Mercedes which had developed those sturdy cars of years passed.]
  2. Mercedes had access to diverse advanced engineering groups. Like Chrysler of the 1960s, Daimler built everything from spacecraft to power systems, with pure research labs that did nothing but “think.” This was thought to insulate Daimler from periodic downturns of the automotive industry (they were to find out differently).
  3. Daimler had a quality control system in place for Mercedes that was the given reason for the high initial quality of their cars. Eaton wanted this desperately because of the problems of his system. [Webmaster note: Mercedes’ system involved massive testing and rework, and was economically unfeasible for Chrysler.]

Schremmp had to know what was going on at Daimler-Benz and that the war chest that Chrysler was sitting on was the golden goose, ready to be cooked and eaten. Nothing else of Chrysler had any real value to Mercedes, except for flexible platform design and development. An outgrowth of AMC, it was a different manner of thinking. At Mercedes, each car was developed for a specific set of conditions, with no thought of parts sharing across models, under the theory that the customer will pay for whatever Mercedes produced. Engineering, not the customer, mattered.

A different engineer wrote: “[During the Daimler and Cerberus years,] a lot of work went into the interiors. Most of the time the engineers and designers would go through it once and then management would say it is too expensive and try to cut corners.

Then they would go to the suppliers and then nickel and dime them to see if they could somehow get a better deal because somehow they believed the buying public wouldn't see the cost cutting going on.

Then the vehicle would come out and the customers would do their double take, hold their nose, and run away. Then the cars would be sold at a discount, eating away any cost savings the brilliant management MBAs thought they would bring to the table by making it cheap.

One of the higher level execs even said that the American buying public would put up with junk since they were already buying the current junk (implying they were stupid). He was from Germany.

The Caliber SRT-4 was delivered without AWD because management didn't think the buying public would want it because it would add $800 more to the sticker. 300HP to the front wheels for [around] $20k. Way to go.

Chrysler has, on the other hand, centered all product development and design around what the marketplace was demanding and was expected to demand in the future. Flex allowed Chrysler to respond quickly, as long as budget was there. With all the Cost Savings programs, joined under the SCORE heading, Chrysler was saving money for the next cycle downturn... which was fast approaching. I must give Eaton credit here... the corporation could survive a long time on $8-$12 billion dollars. Future development was assured.

When Daimler people came across the pond, it became apparent that things were going to change—they were the “saviors” of Chrysler [which at the time was immensely profitable] with their “superior technical knowledge” and “superior marketing knowledge.” The first hit I know of was the elimination of the SCORE program Chrysler had so successfully used to involve the suppliers to reduce the components individual costs.

The SCORE program is covered well here on Allpar, so I will not belabor all the points. See:

I will however, re-emphasize one point (my paraphrase):

By involving the supplier in the INITIAL design of the vehicle, KNOWING they were going to get the business and any saving they could bring to the table up front was going to be shared EQUALLY with the supplier, turned the supplier into a Chrysler design, engineering, and manufacturing partner and extension, by default, with as much to lose as Chrysler if a mistake was made or subquality parts were used.

The Chrysler PT Cruiser is rebuilt

Mercedes people, when first viewing the PT Cruiser and its engineering, were aghast at the “sloppiness and shortcuts” (a quote I was given by one of those Chrysler people present at that design review), and the program was halted within a week. Hard tooling was ready to be built to put the vehicle into production, but none of that mattered. The car did not meet their standards and never mind the customer. “We know what the customer needs” was a favorite saying that was used to justify the decision and the opinions of the Americans were politely listened to... and ignored.

Every piece of the car was scrutinized for deviation from the Mercedes Design Standards Manual (a real book, like the Chrysler Design Standards references in CATIA and in hard copy—this was the collected experience of Chrysler since the 1950s on “how to build a car and what to use.”)

The design review of the PL (Neon) itself resulted in the same end, as did the LX and BR (Ram). All of the programs were stopped dead in their tracks and every part, no matter how close to production, was placed up for review. Crash test results were no longer to be acceptable, but rather had to be the “best.” Daimler’s inability, or perhaps disrespect (to the Chrysler guys’ experience) to define the term went against everything that had been instilled into every Chrysler employee since 1989, the introduction of the Quality Improvement Process headed up by Lutz and Stallkamp.


Some good came of this, like adapting the E Class suspension geometry to the LX (funds had set lower requirements for the original) and, for a while, things were taken in stride by the Chrysler engineers and other employees. This also included the jobs going on at JTE (then renamed PROC- Plymouth Road Office Complex); and the team that did all the trucks, both Jeep and Dodge, was split up.

PROCHowever, a problem started to be noticed by the Chrysler people. Any time any American said “no,” that person was gotten rid of shortly thereafter, regardless of position or experience. Discouragement accelerated and the top staff started leaving in droves. People that were instrumental in the development of the “fun” in the cars of Chrysler (guys like Neil Hanneman from Viper) had enough of the disrespect and browbeating from Daimler.

Daimler’s “quality gates” process was supposed to provide a stop point for the vehicle design concept, engineering, tooling, and manufacture to review the work to ensure the design met all the program requirements at each stage of the process. No gate could be passed until the review board approved the work. Once passed, no decision was changed, regardless of supporting data pushing for a change or revision.

From a theoretical standpoint, the idea was good. The downfall was in the implementation. What the review board said, went... which was opposite from the Chrysler approach of “give the responsibility to those that perform the job.” No project could pass a gate without approval, and a manager that exercised control over his people was rewarded, much in the same manner as feudal warlords, by their Daimler masters. Managers that exercised personal initiative and free thought that went against the “party line” were removed from the decision process.

This, combined with the earlier promotion of inept and incompetent managers (those not capable of designing and engineering a vehicle, but politically astute enough to be good at CYA) led to the rapid decimation of those most qualified to bring Chrysler out of the doldrums—the top 20% of the independent thinkers that Bob Lutz, Tom Stallkamp, and Francois Castaing had so carefully nurtured to be independent and provide the best results for any given set of circumstances at the least possible cost, regardless of political and personal power.

Francois CastaingLutz, Stallkamp, and Castaing could be the biggest jerks anyone could imagine, but they gave an engineer enough rope to hang themselves if the engineer was not technically competent—personal attitudes didn't count against anyone in their view — everything was about the product. You could call it the Chrysler Way...entrepreneurship of classic sense and meaning. Each engineer was responsible for his own work and its interface into the total vehicle, not having a review board that could arbitrarily reject any work simply on a whim, as was done under Daimler.

Dieter Zetche and Wolfgang Bernhard learned this the hard way after the 2004 Durango fiasco, and tried to open up certain areas to the Americans to show what could be done by these Americans who were “so incapable of doing anything properly” (such as the ME Four12 which could run circles around the much pricier McLaren/Mercedes project of the same time), but this was inimical to the method of business favored by most of the Daimler people at Chrysler, as well as by the Supervisory Board in Germany. Both these excellent managers, Dieter and Wolfgang, were in “hot water” continuously with their supervisors due to their gradual understanding of and attempts to return to the Chrysler Way of doing business.

The redesign of the J-cars (Sebring, Avenger) and creation of the Compass and Caliber

The quality gates and rejection of the PL, JA, and JS platforms as inadequate for Daimler requirements (no mention was given to the customer, except in passing, as an excuse to divert blame) was what led to the forced joining of the Mitsubishi and Chrysler small car programs. This led to the decimation of the Small Car Platform team in the first of two massive program layoffs at CTC, ostensibly for “economy of efforts;” most of those initial 2,000 design and engineering layoffs came from the Small Car Platform Team.

Because the design staff at CTC was unionized, there were enough other layoffs that the US Government’s Department of Labor, if called into play, could be diverted from the real reason these people were gotten rid of — they were “troublemakers and disloyal” to the hierarchy.

To truly understand the Chrysler preoccupation with personal responsibility, consider an experience I had with Bob Lutz.

There was a ride and drive review at Chelsea Proving Grounds in 1991 for prototypes of the 1993 Ram trucks (BR / T300). Bob Lutz did not like how the lower control arm mounts of the front suspension showed below the cab, and wanted them changed to something that “looked cleaner.” I said, “Under QIP provisions, no, because the angle of those LCAs are what allowed me to give the truck such a smooth ride offroad.”

Bob Lutz was caught in a bind. QIP said that the responsible engineer was the final arbiter, and Lutz was the leading promoter of the QIP process. He let it go, and that suspension got numerous awards from the magazines and reviewers.

Under the “Quality Gates,” my comment would have resulted in my being escorted off the grounds by Security. The two sets of rules were totally incompatible.

The quality gate system did not have any provisions to alter a decision based on new information. Communication to protect one’s own fiefdom was rampant throughout the remaining staff of the corporation. In came Mitsubishi engineering, at the direction of Daimler (which appeared to be unaware of the warranty coverups that would cause problems for Mitsu and lead to the firing of Wolfgang) and their new platform to replace the Chrysler small car team.

The Mitsubishi small car was not bad. It was economical, easy to assemble, and used relatively cheap parts. The remaining design engineering staff had been ordered to adapt the Mitsu platform (a platform is a set of dimensions—not a set of parts) to the new C and D class cars.

At the same time, Daimler was forcing a change to CATIA v5 onto Chrysler. Moving to v5 of CATIA may sound like a small change; in simple terms, v5 went back to v3 methods of generating data to design the vehicle, under Mercedes-developed operational rules—the manner of data organization, the manner of using the functions, etc. This is one of the problems the late Freightliner would painfully face later.

There was one catch—v3 had been out of the picture since 1990/1991 at Chrysler, and the people that knew how to use v3 did not exist any more—v3 was obsolete. There were not enough trained engineers within Chrysler, not within the Metro area, not within the US, not in the world. The software was also notoriously unstable and did not “co-operate” with version 4 data (Daimler was to soon find this out in a public blowup on the Airbus super airliner, the A380, through EADS, from which the Airbus program has still not recovered in 2010).

A deeper look at CATIA v5 and v6 with comparisons to EDS / Siemens NX

To use v5, you had to train all the people involved how to use the tools, including the people that trained others, all over again, including the inherent mistakes (not intentional ones, but I am sure that was also an issue, due to the overbearing attitude in mandating this software) that come from the learning curve of the tools you were expected to use. A group of people were brought in from the aerospace industry (Boeing, primarily) and dumped into the needed design positions, but these poor guys had no idea what they were getting into.

The programs (both C and D cars) failed miserably, due to the combination of CATIA v5, program management’s lack of direction, irreversible points and decisions, incompatible and incomplete understanding of requirements of the tools and program, and incompatible manufacturing parameters (Mitsu vs. Chrysler methods), and had to be completely restarted (for the design process—the development mule data was still valid, up to a point).

To be usable most 3D data had to be totally rebuilt —none of which helped the image of the Americans. Fingers were pointed and as usual, the German fingers were longer, causing those that raised the most ruckus, the people in TCC that knew and told everyone in management it would not work, to be “absorbed” into the main IT group of DCX...a group of PC weenies that had no idea how to build a car.

CATIA v6 image for mechanical engineering

TCC (Technical Computing Center) was made of guys like me (design engineers) that had been later trained in the computer stuff — a support group that understood not only how to design a vehicle, but also how to explain the tools to the end user, provide training, and help out in small projects. TCC was, at best, a group of maybe 150 people, versus all of Vehicle Engineering of over 6,000 people. TCC simply did not have the staff to perform as a complete design group.

The redesign of the Stratus and Sebring (as well as the “new” Caliber, Compass, Patriot, etc.) was done on the fly and in a much shorter time than Daimler had allowed, but still, it was not enough time to redo everything that needed to be “fixed” on the cars. Chrysler guys knew it (the few that remained and stuck it out), Deiter knew it, and the DCX board was made aware of it. They would never gain the level of control that they wanted, so they gave what was left of Chrysler away—so they could say it was all someone else’s problem.

The terms rape, pillage, and plunder really do describe the mess that caused probably the most noted destruction of a carline ever.

Questions and answers from 2010

Why couldn’t Chrysler create a “new Neon” under Cerberus, without Fiat?

The amount of work that is in process versus the amount of work required has to be balanced against the knowledge level of the available staff and the physical numbers of people that can do the work. After all, there are only 24 hours in a day.

A single, complete program, from start to finish, will take a body count of approximately 1,700 and 1,800 dedicated people through production. This is including all the disciplines from engineering and design, through legal, management, support, manufacturing and production, but not including physical plant support (I am assuming here there is a plant available to build the car or truck and the staff in available-a new facility roughly will double the costs of a platform). Currently, I know several people in the upper levels of CTC that are working on a minimum or 3, others working on 5 or 6, programs at one time.

You cannot expect Cerberus management to dictate 38 hours of work per day and reasonably expect it to be done. Priorities must be decided and acted upon. You would have to ask yourself (assuming you would be in the position of this management), “what offers the most return on our investments made so far”, “what provides us with the most long term return,” and, finally, “what upcoming regulatory effects will be in place in both the near term (5 years) and long term (15 years)?”

As always, it comes down to the most improvement for the least cost first, then approach the long term benefits and developments, all without losing the momentum achieved since the “dismemberment” of the corporation from Daimler management and financial controls.

Q: What happened to the “final tuners” who set up the feel of the PL, JA, and LH? Were they still around for the PT?

The final arbiters of any vehicle’s “customer feel” is Vehicle Development Group, which was then part of the Platform Team. Each group had its own dedicated vehicle development group that optimized each vehicle’s handling and road feel. There were also a lot of cross-group transfers between the platforms to ensure that the nebulous “Chrysler Corporate Feel” was as close to constant, across all vehicles, as possible.

When Daimler came in the picture, some were laid off, or driven out, or shunted off to other groups (such as “Liberty” and its successors) to get things “under control” and “eliminate overlap.”

Although there were serious losses of talent, several people, such as Steve Williams, decided to stay and his talent for being able to control costs, develop what the customer needs, and deliver more than expected, was applied so that he ended up as the manager of the JTE (PROC today) Body-On-Frame Product Team.

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