Here's an interesting column from the auto writer of the Detroit Free-Press regarding Chrysler's woes. Once again, the rank and file pay the price for bad management.
Lawrence Ulrich: It's the cars, stupid
Building better automobiles would put Chrysler on track
January 30, 2001
BY LAWRENCE ULRICH
DETROIT FREE PRESS AUTO CRITIC
As Chrysler prepares for a belt-tightening that would put Richard Hatch to shame, car buffs are left shaking their heads.
Chrysler's retro-styled PT Cruiser was the runaway winner of this year's North American Car of the Year award. Yet the company is bleeding enough red ink to stain some 26,000 pink slips.
How could it happen?
The company's financial and tactical missteps have been obsessively documented. Yet in many ways, it's still the cars, stupid.
If Chrysler simply made more cars and trucks that people wanted to buy, and would gladly pay full price to own, the company would still be enjoying honeymoon bliss with its hunky German suitor, Mercedes-Benz.
Hasn't happened.
Instead, the Chrysler Group -- that is, the American arm of DaimlerChrysler -- saw its U.S. market share slip to 14.5 percent in 2000. It's the company's lowest market share since 1992.
You don't see that happening to the likes of Honda or Toyota. Counting its Lexus luxury division, Toyota now sells nearly 11 percent of all vehicles sold in the United States. The Japanese automaker is now chasing the lucrative sport-utility and pickup markets. It plans to nearly double U.S. production by decade's end in hopes of displacing Chrysler as the third best-selling automaker in the United States.
Chrysler still sold 2.5 million vehicles last year. That's over a million more than it sold in 1991, a remarkable two-thirds increase.
Sounds like a problem most companies would kill for.
The minivan factor
But to support such monumental sales, production capacity had to be boosted. When sales began to soften last year, Chrysler was forced to shout "Discount!" like a second-rate carpet chain, especially on older designs. Chrysler customers show little inclination to pay full price on even the company's latest minivans.
Now a bread-and-butter product is one thing, but minivans for Chrysler have been more like the water of life. As the company reminds us from time to time, it invented the minivan, baby. And the Chrysler minivan hauled more than American families: It helped haul Chrysler out of impending bankruptcy. Today, however, Chrysler has seen its share of the minivan market fall nearly in half, to about 35 percent.
Some of this isn't Chrysler's fault. A few industry experts have grumbled that Chrysler's 2001 minivans didn't leapfrog the competition the way they did upon their second redesign in 1996. But these days, there's competition, mainly from the Honda Odyssey.
To me, Chrysler's newest family haulers hold their own with the Honda in nearly every area, and offer superior comfort and handling. But it appears that Chrysler miscalculated what people would pay for its new minivans, especially with Honda charging a few thousand less for its Odyssey. Already, Chrysler is scrambling to introduce less-expensive, mid-level versions of the Dodge Grand Caravan and Chrysler Town & Country.
Even when Chrysler has raced ahead, it has appeared to ease back at times, satisfied that the tortoises can never catch up.
"The Chrysler minivan is a terrific piece, but it's as if they never saw the competition coming in the minivan market," Art Spinella, vice president of CNW Marketing Research in Bandon, Ore. "That's been the history of Detroit; they take their position for granted, and when they get hit upside the head they can't figure out why it happened."
Do more, be more
The point is that Chrysler needs to refresh its successful products more often, and more thoroughly.
The Dodge Ram came out of nowhere in 1994, with a tough-looking face that every trucker could love. Overnight, the Ram became the cool full-size pickup. Dodge tripled its share of the full-size pickup market in just three years.
That was seven years ago -- an eternity in the auto business.
In that time, Dodge has failed to introduce heavy-duty, commercial versions of the Ram that contractors and other hands-on folks demanded. Ford and Chevy were happy to accommodate them.
The company will finally unveil a fully redesigned 2002 Dodge Ram Feb. 7 at the Chicago Auto Show. In the meantime, sales have begun to slip.
Rather than build new versions of the Chrysler Sebring and Dodge Stratus on an all-new platform, Chrysler saved money by using the current platform, which is showing its age. In the short-term, profits may be higher. Down the road, buyers aren't likely to overlook that Sebring and Stratus competitors are riding on more sophisticated chassis.
Even the red-hot PT Cruiser will cool off if Chrysler is content to watch sales roll in, rather than introduce new versions to keep the vehicle's incredible buzz alive.
In another move that has dismayed some analysts, Chrysler has actually delayed or even canceled several future products. A full-size SUV competitor to the Chevy Suburban and Ford Excursion has been killed. A new Grand Cherokee will ride an updated platform, rather than the new KJ platform that underpins the Jeep Liberty.
Now, some of those moves may make good business sense. But some analysts feel Chrysler needs to invest more, not less, in new products to succeed.
Another source of concern is that Chrysler sometimes spends less money developing new models than Ford Motor Co. and General Motors Corp. spend for comparable projects. For the revamped Neon compact, Chrysler spent only about 82 percent of what Ford invested in its Focus, Spinella says.
The results show. The Focus, by a virtual consensus of critics and analysts, is the superior vehicle.
It can bounce back
There's good news as well. Chrysler's Jeep division unveiled its all-new Liberty sport utility at Detroit's recent North American International Auto Show. As long as Chrysler can convince customers to pay enough for the Liberty to cover additional costs in features and engineering, the Liberty could be a strong competitor for the Ford Escape, Toyota RAV-4 and other compact sport-utilities.
Remember, Chrysler has been the domestic design leader for a decade, with hits from the PT Cruiser to the Chrysler 300M. A few more home runs like the Cruiser, and it could be back on track. Chrysler has often endured pendulum swings that make you wish it had a corporate form of lithium.
Who knows, the up-and-down nature of this automaker may be the best thing they've got going for them. No matter how low these guys go -- and things are nowhere near as bad as the $2 stock, near-bankruptcy and government bailouts of the late '70s -- there's always the sense that Chrysler will shake itself out of any decline and climb back toward the top. Whatever it takes.
Yes, I know an auto critic isn't supposed to root. But my older brother works for Chrysler. Like a lot of his colleagues, he and his wife have kids to feed. Besides, this is Detroit and DaimlerChrysler is our automaker. Half of it, anyway.
So here's to a healthy Chrysler -- for all our sakes. |
