by Jerry Flint
Forbes.com
Published on 03/17/2007
I have already written about the worst thing that could happen to Chrysler: Takeover by a vulture that resells the richest parts — Jeep and the minivan plants — and shuts the remainder. That would be the end of Chrysler.
Now think of the best that can happen. A fabulously wealthy American or a group of American private equity investors takes over Chrysler. The buyers are — gulp — patriots. They want to save the company and all those jobs for America. They want to prove that Americans can still do it. You know, like when Richard Gere sees the light in Pretty Woman and decides to build big, beautiful ships instead of breaking up that shipyard and selling the pieces. Patriotism aside, these steel-willed investors know that with the right leadership and products, Chrysler can make billions of dollars of year. The buyers also know that they could become filthy rich in a few years after they fix the company and take it public again.
So how do they revive Chrysler?
Start by recruiting great leaders. Offer Dieter Zetsche the job. He should be happy to quit that pain-in-the-neck job as chief executive of Daimler and join a bigger company, American Chrysler. He can get a piece of the action and become fabulously wealthy, live in Bloomfield Hills again and be the toast of the town. Just remind Mrs. Zetsche that she cannot serve beer to teenagers over here.
If Zetsche could offer Wolfgang Bernhard the No. 2 position, it would be perfect. The Wolfman did a fine job at Chrysler a few years ago and then did the same at Volkswagen. Get those two back, and Chrysler would be halfway home. Maybe they could get Tom Stallkamp, who is currently a partner in a private equity firm, to come back and handle suppliers again. He is great.
Of course, product would be management's biggest challenge. For example, the new midsize Chrysler Sebring and Dodge Avenger passenger cars are close — but close only counts in horseshoes. They need sharpening, such as six-speed transmissions on all models, better ride and handling, and better materials in their interiors. The company should also try to reduce its dependence on Hyundai and Mitsubishi in developing vehicles and engines. Chrysler's own would be better. These joint-venture platforms and motors are new, so Chrysler has several years to design and engineer its own replacements.
The full-size passenger cars — the Chrysler 300, Dodge Charger, Dodge Magnum and Challenger coupe (coming) — have been successful, so the company needs to nurture this franchise. A few suggestions: Pay more attention to reliability, fit and finish and evolving the bold design of these vehicles. And sell the fuel economy of that Hemi V8 with the cylinder cutoff. It's really stingy on the highway.
I think that the company should also build the Imperial, a show car based on the Chrysler 300. Limo companies are tired of the old Lincoln Town Car, and the market is ripe for a fresh entry to grab this business. Chrysler's Canadian plant has enough capacity to build the Imperial.
Chrysler should also rethink its "B-segment" small car. The current plan is to have one built in China. Rethink quickly. Chinese manufacturers are still working their way up the learning curve. If management does not trust the Chinese to deliver a high-quality vehicle, then find another low-cost answer like Mexico, which already builds a number of good vehicles, such as the Nissan Versa, Chrysler PT Cruiser and Ford Fusion. Mexico should pay for the plant, as our Southern states do.
Trucks are another key part of a Chrysler revival plan. The company is getting a gift from both General Motors and Ford, which are both exiting the minivan business. The big challenge is going head to head with Honda and Toyota, but also with Hyundai/Kia Motors, which now has a strong minivan entry. Chrysler will have a new minivan this fall, and it should redouble its efforts to ensure a successful launch.
The Dodge Ram big pickup is still a strong seller. Again, the company must continue to improve and refine this vehicle to fight off the new GM and Toyota challenge. In the meantime, the company is losing ground with the small Dakota pickup and its large SUVs, the Dodge Durango and new Chrysler Aspen. The current plan is to shut the Newark, Del., assembly plant where it builds those SUVs. I think that Chrysler should revisit this strategy and try to come up with a way to either revive or replace those struggling vehicles and keep the plant going. Anyone can shut a plant; the trick is to create vehicles that we want and will pay top dollar to get.
Jeep is Chrysler's strongest card. The new four-door Wrangler is a big hit, and it does a great job of reinforcing the rugged image of Jeep. That is not the case with the "sissy Jeeps," as I called them — those two new ones, Compass and Patriot, built off a car platform. For the most part, these Jeeps have failed to impress the automotive press. Even so, they have a good future if Chrysler improves on their shortcomings.
The Grand Cherokee has been the cornerstone of the Jeep franchise. Here is the trouble. Sales are falling because there is so much competition, and, frankly, Grand Cherokee is no longer one of the leaders in handling, quality or value. A Grand Cherokee derivative, the relatively new Jeep Commander, a version with three rows of seats, is awful-looking and needs better packaging for rear passengers. Redesign it and go back to that terrific name from Jeep's past, Grand Wagoneer. It was a winner, so use it.
While Chrysler is not strong in most foreign markets — and that is one of the shortcomings of the company — it does have one global name: Jeep. Let us not forget that Jeep rides over rough terrain, and most of the new growing markets are rough terrain: China, India, Russia and Africa. So build Jeeps where the building is cheap — in India, maybe — and use that as an export base for an assault on global markets.
Dealers are another crucial piece of the puzzle, and the dealer body today is not a happy one. I think that the new Chrysler should start by rethinking the drive to combine Chrysler, Jeep and Dodge dealers. The company has already merged many of these dealerships, but the goal should be to create future exclusive franchises.
Create a new Plymouth franchise. The base vehicle would be the new Plymouth PT Cruiser, but add a panel truck and something like the glitzy two-door show car. Give the next version of the PT convertible four doors. Chrysler could start out using Toyota's Scion model — carving out a Plymouth Center in some existing showrooms.
Marketing and advertising: Ask Mike Jackson what do about marketing and whom to hire. Mike is the chief executive of AutoNation and the best there is. He would help. Chrysler marketing seems to consist of "Put another spiff on the metal." They have to learn to sell, as GM is learning. The company has to avoid disasters such as the "Lingerie Bowl" fiasco of a few years ago.
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