Getting Chrysler back on its feet

Nearly ten years of Daimler ownership have taken their toll on Chrysler. The 2.0 liter engine was allowed to age and be replaced by powerplants that are far too peaky for the average driver; cars were given odd combinations of far-too-expensive and far-too-cheap materials and designs; and, overall, there have been few real winners in the lineup since 1998, the two big exceptions being the current Wrangler and the 2001 PT Cruiser (some throw in the 300C as well, though as a whole the LX does not seem to have sold as well, or made as many profits as, the LH line had.) Now, yet more factories are slated for closure and shifts at surviving factories are being eliminated. What can be, and what is being, done? Or, to be more precise:

1. What can be done within one year to make the lineup work?
2. What needs to be done so the lineup will work in 2011?

These are very different questions. With regard to product alone, I suggest:

Here’s what Chrysler is doing do for #1:
1) Use the GM hybrid in trucks, SUVs, etc.
2) Dodge Journey, otherwise known as the “we’re betting a lot on this thing being popular” truck
3) Higher pressure turbo detuned to 270 hp for Sebring and Avenger to replace the 3.5 V6?
4) Higher quality through empowered teams (see Allpar article)

Here’s what they COULD do for #1:

1) Interior tweaks including better seats.
2) Special editions, etc.
3) Retuning of the World Engine.
4) Light pressure turbo or supercharger for the World Engine to make it more desirable

Here’s what Chrysler IS doing for #2:
1) LY series replacing LX series; possible AMT.
2) Truck aerodynamics and other key elements being reworked.
3) AMT/dual-clutch for minivans!! Gas mileage + performance + smoother operation!
4) Phoenix engines!! Gas mileage + performance!
5) Aerodynamics taking front stage
6) Going back to the early 1990s “involve suppliers early” on interior components; see Allpar articles
7) Higher quality through empowered teams (see Allpar article)
8) Horizon/Omni replacement (from China)
9) Rams with Avalanche style bed storage, new Cummins diesel in 1500
10) Dakota re-engineered as a lifestyle vehicle rather than as the heaviest duty mid-sized pickup; optional Cummins diesel
11) Durango based on lighter next-generation Grand Cherokee

Here’s what they COULD do, which would in my opinion fix the main problems of their bread and butter vehicles (aside from the steps mentioned earlier):

1) Engineer a Neon replacement and PT Cruiser replacement off a heavily modified Caliber platform using a PT-like suspension front and rear to save money and increase space utilization
2) Revisit pre-Daimler LX work; downsize slightly and replace Avenger/Sebring with larger FWD cars (may not be practical)
3) Replace the World Engine either with a more evolved version of the old 2.0/2.4, or with something based off the Hemi or Phoenix engine
4) Extended-wheelbase Commander
5) Scrambler (Wrangler pickup)
6) As the AMT takes over, put the six-speed automatic into cars that had the four-speed automatic

Of course there are more possibilities, and none of us have the warranty information, profitability figures, or other data that the execs have. We don’t know, for example, whether the LX really was more profitable than the LH, though I highly doubt that it could have been. We don’t know what actually customers wanted versus what dealers ordered versus what the factory incentivized into being. There are all sorts of administrative issues that are of key importance, including advertising and marketing, media relations, supplier involvement, quality enhancement, labor issues, production methods, tooling (Toyota drastically cut costs with new stamping presses that allow for lower roofs, less noise, and much lower energy usage, for example), CATIA (where Chrysler has long been a leader), emissions and fuel use, international sale, dealer relations, service capabilities, customer alienation prevention, customer loyalization (BMW excels at that), and more. The list of key issues goes on and on and on.

Fortunately, it’s not just Nardelli calling the shots out there. We hope the team gets it right this time. It’s a very hard job; journalists want one thing, normal buyers want another, and then there are the conflicting demands of Chrysler loyalists, other-brand loyalists (some of whom will never, ever, ever, ever buy a Chrysler, no matter what), and the on-the-fence crowd. There are alienated customers to be re-attracted on a constant basis through customer recovery - something not yet attempted at Chrysler, as far as I know - and there is much to be done before any dealings with a dealer or with the company, particularly the zone reps, convinces buyers that they really should have gotten a Toyota or a Chevrolet or what-have-you. There is Chrysler’s horrific image for quality to be dispensed with, and there is the constant question of Plymouth and an entry-level budget brand which could be more recession-proof than the Dodge, Chrysler, and Jeep brands are. On a higher level there are strategic questions of niche sales vs mass market sales; Chrysler is all but out of the car mass market now, but they could make it back in if their other ducks were in order.

Chrysler has a rough road ahead. I, for one, hope that their recent cost cutting moves were intended to give them some shock absorbers as they move into the future. At least in 2012, the V6 and V8 powertrains should be second to none.

The Name Game – Brand Equity and Chrysler

Corolla, Civic, Altima, E-class, 3 Series; Everyone knows these names and the vehicles they describe. Why? Simply put, it is brand equity. Start small, and build on it. Keep building on it. Improve each generation, build loyalty to a nameplate and a company.

I don’t know how many generations of Corolla there are, or 3 Series, or Golf. It doesn’t matter. What matters is that these Companies have made continuous improvement to the same nameplate for several generations. The result is brand loyalty, and repeat business, for the nameplate and the company.

Why is this so hard for the domestic manufacturers to understand? By changing your nameplate with every new incarnation of vehicle you suggest that the last one wasn’t worth preserving – ergo, your company makes throwaway vehicles, not built to last, not here for the long haul, not worth being loyal to. This creates a perception of low quality, quick turnover, and a lack of respect for the people purchasing your product. Are these not the same qualities ascribed to the domestic three?

To be fair, the truck divisions of all three have got it, finally we have generational truck lines. Still not so in the car lines, though, with a few exceptions. What does Caliber mean to me, or Compass? Give me a third gen Neon, or a Valiant, or a Fury. I would like to buy something with some history and longevity.

Chrysler and Dodge are finally looking to their heritage to build equity, but so far they are trading on past glory. They need to commit to a long term development of specific vehicles and to stick with it. To show some serious commitment to their own products and history and drop the faddish name changing. It hurts your reputation, and the public perception of your product.

Take the 300 for example. Why ‘C’, when it should be ‘N’. That would make a believer out of me. Why cheapen the 300 nameplate with base 2.7 V6! That’s what killed it the first time around. ‘Banker’s Hot Rod’, was the term, fast, beautiful and expensive. You’ve arrived baby! Revive another name for a lesser car and keep the letter cars exclusive. That is brand equity. The Imperial was Chrysler’s technology leader, and competed with the best in the world, do it again, right this time.

Don’t drop the PT Cruiser, make it better, same with the Pacifica, you were first out with the crossover, brag about it, then go whup the competition’s butt with the next one. Bring back Plymouth, whatever the cost, it’s your bread and butter. Now is your chance to fix perhaps the biggest mistake DaimlerChrysler made and reintroduce Chrysler’s economy brand.

I know people who are on their third Corolla, fourth Civic, and other than the minivans, I can’t think of a single third generation Chrysler product. (trucks excluded) How can you build owner loyalty with a constantly changing nomenclature? It’s a simple answer; pick a name and a product and develop it over time. Stop throwing out the baby with the bathwater!

It’s time for Plymouth to return

America seems to be celebrating the return of Chrysler to American soil. Though the company has been slashed and burned by Daimler, suffering insults, taunts, mass layoffs, factory closings, firings of key people who dared to talk back, cash-robbing, and insane levels of cost-cutting, Chrysler has survived and is being supported by many people who have spent the last seven years insulting it.

Now the Chrysler brand can stretch its wings, and I, for one, think it should do it for real. That means there can’t be a Chrysler PT Cruiser, a Chrysler Sebring sedan with a four-cylinder or a 200 horsepower V6, a V6 powered Chrysler 300 with interior trim that belongs in a Honda Civic, or a base Chrysler Town & Country that is identical in just about every meaningful way to the Dodge Caravan.

Those vehicles can’t all move to Dodge, which is trying to take the big, bold Ram styling and Cummins-diesel-power reputation and transfer them to its cars, as well. Then Dodge would be a great big mess.

Instead, the Chrysler brand needs to stop measuring itself purely by sales volume and start considering profits and reputation. The advertising has moved in the right direction, but the product doesn’t support it. There’s no personal status in owning a Chrysler when the brand includes a large variety of strippers, including heavy cars with small engines. It would be like BMW selling the base Mini as a BMW, which you’ll notice it does not do. Or like Cadillac selling the Cimarron, the car that nearly destroyed Caddy’s reputation. Or like Mercury selling tarted-up Escorts, which finalized the death of Mercury’s once-elite reputation.

Now think about the China cars, and you will probably agree -

Plymouth needs to come back.

Plymouth is the value division, the Chevy, the Ford, the Toyota, the big amorphous blog division that doesn’t try to strike out on its own and be unique and clear about where it’s coming from. Plymouth is where you get your bread-and-butter cars, your family sedans, your commuter cars, your standard minivans. Plymouth is where Chrysler houses its inoffensive, practical vehicles. If they make a performance car, it’s a Road Runner or a Duster, not a Barracuda or GTX or ‘Cuda. (Look back and see which ones sold well. The Barracudas and ‘Cudas stagnated on dealer lots with the GTX. The Road Runners and Dusters sold like gangbusters.)

Plymouth will happily take on the China cars, and they’ll fit. Plymouth will take on the base model 300, letting Dodge sell Chargers without 2.7s, and Chrysler sell ONLY 300C versions of the 300. Plymouth will take the four-cylinder Sebrings - or ALL of the Sebrings other than the convertibles. Plymouth will take any Town & Country that isn’t fully loaded, and call it a Voyager.

There are even lots of pre-made customers for Plymouth, assuming they get some cars. I estimate the demand for Plymouth to be at least 80,000 vehicles per year without advertising (but with marketing). That’s not a bad return considering how hard Chrysler and Dodge are fighting for each customer with rebates and advertising. But it’s not totally about Plymouth sales. It’s about profits.

The financial problem with Chrysler now, bigger than retiree costs, or health care costs, or warrantee costs, is the cost of sales. Rebates are thousands of dollars per vehicle, and advertising and marketing are both expensive. Some people say adding Plymouth would only add to the costs, but I disagree. Scion and Mini did well with guerilla marketing, and I think Plymouth could ride on Cerberus’ buzz and guerilla marketing for a while too. Plymouth would also have a built in advantage of being able to use existing names and reputations for cars people liked and remember well - Voyager, Valiant, Duster. (I’m thinking Horizon for the China car if Hornet isn’t used.)

The big payoff, though, isn’t the added sales that Plymouth might bring. The big payoff is strengthening Dodge and Chrysler so they wouldn’t need huge rebates and huge advertising to draw people in. People will pay for status, and Chrysler has none right now. To bring Chrysler up, it needs Plymouth to fill in its low end. Dodge could accommodate Chrysler, but then it would lose its desired “Ram tough” positioning.

Toyota now has three brands; Honda and Nissan have two each; Ford has Ford, Mazda, and Lincoln in addition to numerous other domestic and foreign brands; GM has many. Even BMW has two brands in the US now, and when Mercedes brings Smart here, they’ll have two as well. As the world’s fourth largest automaker, Chrysler can certainly afford a third brand, especially one that will tell the world - and its past, discarded, insulted customers, ready to return at the right time - that their pride has returned. Walter Chrysler said that without Plymouth, there would be no Chrysler. It’s hard to say whether he was talking about financials or branding, but I believe it’s true.

Please Digg this!

Why Chrysler Needs Plymouth - Chapter 12,658

This is how I see it; which will be my armchair CEO thought of the day.
(A stolen quote from Stratuscaster)

Every auto manufacturer should have a brand that produces the bread and butter / vanilla vehicles as well as produces vehicles that allow first time car buyers to be introduced into the company. With the death of Plymouth, a lot of these types of vehicles are making their way into the likes of Dodge and Chrysler which has the overall affect (in my opinion) of watering down these divisions.

Chrysler and especially Dodge, cannot be all things to all people. Each brand needs to carry or convey some sort of image. More times then not, it is this image that sells a product. Why else would some people buy a Viper over a Corvette? It is the image of higher class, aggression, luxury, and wealth to name a few, that helps buyers of products to decided.

This is one cause for the declining sales of Mercury, Lincoln, Saab, Pontiac, and Jaguar to name a few. There is no defining portrait or image that these automakers convey with their vehicles or in their advertising. Can someone tell me what Saab is? Are you buying a luxury car, sports car, are they masculine, will women adore my car, how did my math test go last week….wait I think I am getting off track here.

Chrysler needs to move upscale and compete against the likes of Buick or Mercury. It would be nice for them to compete again the likes of Lexus, Cadillac, Lincoln, but I don’t think that Chrysler has enough history of perfection or street credibility to do so at this time. However, I do think that Chrysler is getting close. The 300 is a great start, the Imperial would be wonderful, but if you remember when the Pacifica was first introduced…Chrysler thought they had IT…the consumer told them otherwise.

Dodge needs to sell sportiness, machismo, affordable muscle. There is no need for sub-compacts, intro-vehicles, or vanilla minivans. If they are going to make a minivan…give it some attitude, then may be more males will want to buy one.

Plymouth will fit the bill for the cars that the other two main brands will leave behind. The vanilla minivan, the affordable quirky functional PT cruiser, the Hornet with Plymouth clothes, Scion fighters to help introduce the youngsters to the fact that DCX is “cool.”

Well, that is my armchair CEO thought of the day.

Busy days indeed

It looks as though Chrysler’s been busy shuffling people around again (see http://www.allpar.com/news/ ). Don Knott appears to have dropped from sight, though he was honored with being head of the famous SRT group - which seems to have responsibility for the Viper as well as the higher-powered sedans. We’re not sure what’s going on there, but your comments would be appreciated. The other changes seem fairly dense to outsiders as well, but shifting marketing and communications folk is probably the result of continued underperformance in the advertising and marketing arena. That is, Chrysler’s efforts seem to continually de-value the brands instead of pushing them forward and upward.

Part of the problem remains the absence of Plymouth “or equivalent.” The Eagle brand, though it has its followers still, was defined by its competitors: it was there to take import-car lovers, either through simply selling rebadged/rebodied foreign cars or by retuning authentic Mopars (Eagle Vision) to have a more European feel. But Plymouth was, for decades, the heart and soul of Chrysler Corporation. We don’t really blame Daimler for ending the brand; it was a domestic decision, we suspect. After all, efforts to move up into Mercedes territory were nixed because DaimlerChrysler already had Mercedes. (And soon it will no doubt have Volkswagen too.)

But what did Plymouth really do, other than sell (for most of its life) relatively bland cars that admittedly featured advanced engineering and outperformed competitors in just about every way? Well, that’s what it did. It was Chrysler’s Toyota, so to speak - the brand that people bought when they wanted endurance and reliability. Plymouth was one of America’s biggest brands for decades, on the strength of its known reliability, safety, and capability. The flat-head six started out as more powerful than Ford’s famous V8, and though by the time it was finally dropped it had long passed its prime, in the early days Plymouth offered more for the price than anyone else. Even in the 1970s and 1980s, you could look to Plymouth, if not for excitement, then at least for value.

Plymouth lovers point to a variety of “demise indicators,” such as the 1957 models that shook even stalwart fans’ belief in Chrysler’s quality, or the A-body Dodge Dart stealing Plymouth’s niche at the bottom of Chrysler, or for that matter the Valiant being spun off as its own brand in its first year. Then of course there was the Breeze, the afterthought Cloud Car. But perhaps the big problem really was the famous, incredible Plymouth Fury that set those speed records and provided an incredible package of speed for the price, because from that point on, Plymouth was into racing, and the brands started to get confused. While it’s true that Dodge stole the Valiant, Road Runner, and Duster from Plymouth, it’s also true that Plymouth stole the Superbird from Dodge, and the brand identities were never clearly defined in the muscle-car days. Someone in what we laughingly call Chrysler leadership should have stepped in to figure out where the racing was most appropriate. Perhaps NASCAR for Plymouth and all other venues for Dodge, or something like that… or vice versa. Certainly the Road Runner was the ideal Plymouth muscle car, but the GTX should have been a Dodge. Having a C-body Fury - a big luxury Plymouth? - was confusing enough.

A Dodge was in essence a Plymouth that cost $100 more and provided more space or more features. Chrysler was still readily identifiable until the Cordoba and, far worse, the LeBaron K-car and Town & Country minivan, which were all too obviously Plymouths with nicer grilles.

But what about the Plymouth haters, those who think the brand isn’t needed any more because, let’s face it, for 20-30 years, a Plymouth has been nothing more than a downmarket Dodgesler with a softer suspension?

Well, how on Earth are you going to give each division a strong identity if you don’t have Plymouth?

Chrysler is supposed to be attainable luxury, but the first vehicle in Chrysler’s lineup is the PT Cruiser, a car that’s all too obviously a Plymouth Truck, selling discounted for $14,000 with a manual transmission and windup windows. Not the sort of thing American buyers look for in an automaker that also sells $40,000 vehicles. Likewise, the Chrysler 300 with the small V6… the equivalent Dodge Charger starts out with a 3.5 liter V6 (but has to sell the 2.7 to fleets) and so beats Chrysler in features in the same car.

As for Dodge, it too suffers in its desire to have a clear, consistent reputation as the big, bold, quintessentially American vehicle. The Dodge minivan must be relatively bland; that’s what we want. But it doesn’t fit. Nor does a fleet Charger with a 2.7 V6, or a base-engine Caliber, or a four-cylinder minivan.

Plymouth does not need to be exciting, any more than Toyota does. Plymouth needs to be a value priced car with good technology and engineering and reliability, as Toyota is now and Plymouth was back then.

This is my ideal Plymouth car lineup:

1. Valiant: Caliber sedan with conventional styling. (Jeep already sells Caliber wagons.)
2. Plaza (or other name): mid-sized sedan, replacing Chrysler Sebring, which either gets really upscaled or goes away completely.
3. Fury: the cheap end of the LX, with no active suspension, limited options, and one engine, the 2.7. The fleets would love it, and then the 300 could be sold in 300C form only.
4. Voyager: return of the bland minivan.
5. Plymouth Truck - Cruiser.

Perhaps there should be a small Plymouth below the Caliber, either based on another manufacturer’s carline - as Chrysler is now proposing - or perhaps they should see about resurrecting the 1999 Neon, with the base 1.8 liter World Engine, at the lowest price point they can find. (Why the 1999? because, let’s face it, people liked it better.)

Having Plymouth around would free Chrysler to start with the 300C and go on up from there. Having Plymouth would free Dodge to get bolder and brasher without losing its huge sales base. Having Plymouth would also bring back those who will not buy a new DAIMLERchrysler vehicle, because they feel dissed by the superior-Stuttgart crew, and those who were habitual Plymouth buyers and who are leaving the fold because they are not Chrysler buyers, and that’s what they’re being offered.