The speed (or sloth) of private equity
The Cerberus management of Chrysler has repeatedly lectured us on the speed of private equity versus the sloth of the corporation. That may be true if you’re comparing the current Chrysler LLC to the Daimler-led Chrysler Group, but let’s look at the 2009 models to see if it’s really true as an absolute.
Observers have made it clear that they think Chrysler interiors are subpar. The Dodge minivans, once the market leader, have been losing share to Toyota, Honda, and Chrysler since the redesign; all other vehicles are plummeting in sales. Jim Press smiles and says that’s okay because Chrysler is going to be a pioneer in moving from a large company to a small one. That’s all very well and good, but there’s a big difference between losing some sales to gain some profits, and slashing your sales in hopes of gaining some profits. It’s the difference between replacing the Spirit and Acclaim with the Cirrus and Stratus, and jettisoning Plymouth and the Neon.
What I wanted to see for the 2009s was not just a revised interior for the Compass/Patriot and a slashing of possible build combinations - though both were welcome. I also wanted to see someone addressing the sales of the Dodge Grand Caravan, which, like it or not, will be a major component of the company’s minivan sales for a long time - unless they drop it and keep just the Town & Country. Now, I want brand consistency as much as anyone else, but I remember all too clearly what happened when the Plymouth Neon and Plymouth Voyager were dropped: the sales went not to Dodge and Chrysler, but to other brands. Those customers were lost, and there is a core of Dodge Caravan buyers who will not go to the Chrysler Town & Country.
I also understand that the Chrysler brand is now essentially the Plymouth brand, with a different name and vague pretensions towards a high end exterior appearance.
Still, given that the Dodge has traditionally been the volume seller of the minivans, I’d have hoped that Chrysler would have done something to reverse its constant slide in sales, instead of encouraging it and hoping T&C sales rise enough to gain a #1 slot. Instead of that, we have ended up with individual model sales eclipsed by Honda and Toyota. I realize Jim Press professes not to care about sales, but this is still a big deal. Dodge and Plymouth used to hold the #1 and #2 minivan positions, not #3 and #4.
The old Chrysler Corporation would have acted instantly. Neon changes were made constantly, as needed, in the 1990s; they didn’t wait for a new generation. When buyers complained about the interior of the Cirrus, it was immediately changed. When problems arose, they were fixed quickly, in most cases - with a few exceptions, most notably the Neon head gaskets, which went until 1998 or so (probably because that’s how long it took for problems to appear).
The new Chrysler talks a good game, but the Caliber’s problems remain pretty much as they were. The Dodge Caravan remains woefully under-ornamented compared with the Town & Country and both are fairly spartan compared with the prior generation and the Toyota. The “identical suspension” game saved money but that should have been fixed, too. A Chrysler should be plusher than a Dodge, the Dodge should corner better. A Chrysler should start with luxury items standard.
Other models were largely untouched. I wanted to see Chrysler match GM’s XFE models; change the axle ratio, wheels, and tires, and see what kind of mileage you get. Play with the shift point programming. Do something to get the mileage up and the lead out. Even doing a Feather Duster type remake would have been worth its cost in publicity, because many people aren’t shopping for gas mileage, they’re shopping for perceptions of gas mileage — that is, they go to the dealerships of the company they think makes high-mileage cars. Chrysler is rarely on that list, and for good reason. GM is often not on the list, but with the XFE they’re trying hard to get there, and I think they’re largely succeeding. So is Ford. I doubt many dealers will disagree when I say that Chrysler is increasingly not even on the list of prospects, much less at the top.
I do not share a vision of Chrysler as a niche automaker, as Daimler seemed to see it; nor do I see it as a cute little automaker like Subaru, as Jim Press seems to see it. It’s hard to reconcile that with the knowledge that Chrysler Corporation once dominated auto technology and was a force to be reckoned with… and a perennial “must test drive” on most Americans’ shopping lists.
I am waiting another year to see what comes out. I don’t think you’ve given cerberus enough time in control of Chrysler to bring out new stuff. 1.5 years isn’t enough and it was probably all they could do to get the patriot/compass redesigned. For the 2010 model year I expect some major changes, changes that cerberus implemented when the bought chyrsler.
1.5 years is more than enough to address some of the trim, do an altered-axle-ratio version of at least one model to parallel GM’s XFE, etc…. at least, if they could move as fast as Chrysler Corporation could.
To be entirely fair, you may be right that given all the cuts in engineering staff, they might not be able to do much - which still makes them SLOW, not fast, because even after the slash-and-burn management of Daimler, Cerberus made rounds of cuts.
They do seem to be making an effort in quality though. I think that is equally important as the perception of fuel economy–see article below, warranty claims down 29%.
http://www.allpar.com/news/index.php/2008/09/freep-chrysler-slashing-problems/
There is still much to be done. I would have more confidence if they were showing off some of their upcoming designs, as Ford is with the Fiesta, Taurus to some extent, GM is with the Cruze, Orlando.
Is it possible that people like the more elegant styling on the T&C better, and there is really no price advantage to go with a Caravan, so T&C is getting better numbers? Perhaps a Caravan with a taller final drive and reduced price would spark interest in the model.
They need to care about sales. If they can’t compete with Toyota and Honda in sales numbers in key segments what is the purpoe of the company? They aren’t Rolls Royce that can sell 1500 cars a year and call that a success. They need to start putting up a real fight–we’re stuck with Freddie Mac and Fannie Mae, but Americans will soon tire of bailing out industries to the tune of billions of dollars while the executives that ran the companies into the ground walk away with millions. Chrysler should defintely not be an American Subaru–it should be an American equivalent of Honda or BMW. Chrysler can be that successful–most likely that success would be in spite of government policies rather than because of them, even anything positive McCain or Obama might talk about doing to level the playing field or create incentives–if they will put some money into quality, better design, and better marketing of the Chrysler brand itself.
Every best seller eventually gets to the point where its sales decline. Not all that long ago VW beetle held the top spot for imports, Oldsmobile held best seller for family cars around the same time, then Honda Accord a bit later, then Ford Taurus. It is now Camry, made the best seller because of the baby boom generation. But its day will end–is Cerberus studying that? What will Gen Xers or Yers want in a family vehicle when they get to be 35, 45, 50 years old? Is Cerberus going to abandon that next generation to Toyota because “sales don’t matter”? Lay the foundation now. Same with Luxury cars–the top selling ES350 is today’s equivalent of the sedan de ville, popular now but the next generation will not want it. Is Cerberus doing anything to think about what comes next? They need durable entry level cars and desirable high end models. Chrysler is not countering the message that is being heard by yet another generation–that Corolla is good, Civic is good, American cars uncool, no good. Alot of college kids rent cars–when they end up with a Sebring does that make them want to buy a Chrysler product when they have the means to do so? Chrysler may have some ENVI models coming around 2011. Hopefully they won’t be too late to do some good. Cerberus has the money to tackle those things and make alot of money if they figure it out.
Did they reprogram the CVT at all for the small cars? I have not driven a 2009 Caliber yet but I would have thought that they would have been able to squeeze a little more mpg with a CVT retuning. I still can’t understand how Nissan can make such pleasant to drive small cars (Sentra) using the same CVT transmission. I was hoping the CVT would have been drastically improved for 2009. All I have read so far is about better sound insulation-no one has mentioned anything about improvements in the CVT transmission. IMHO it is the CVT that is the achillies heel to the Caliber/Compass. Has anyone drove a 2009 Caliber yet and noticed any improvements?
Looks like I was wrong about the minivans being completely unchanged - they raised the mileage.