California Autos Examiner

Monday, December 24, 2007

Chrysler's Project D: Death to Sebring?

Update: Automotive News is reporting that Project D will focus on interior improvements. No timetable is given, but I'd hope to see it in place for the 2009 model year.

Original 12/21/07 post below
A recent WSJ article isn't painting a very rosy picture for Chrysler LLC. Quoting Robert Nardelli as answering the question (at an employee meeting) 'Are we bankrupt?'" by replying "Technically, no. Operationally, yes. The only thing that keeps us from going into bankruptcy is the $10 billion investors entrusted us with." Nardelli later stated that he meant for the quote to "convey a sense of urgency" among employees.

So we know that Chrysler is going to lose around $1.6 billion this year. However, it appears likely that Chrysler will also lose money next year, although hopefully a lesser amount.

Here is a partial list of ailments discussed in the WSJ article:

A program designed to save $250 million to $300 million in parts and other costs is actually saving only $1 million because of rising commodity prices.

The Chrysler Sebring convertible, where Mr. Nardelli found the wind noise to be totally unacceptable and bordering on offensive at speeds of 80 mph.

Cheap interior plastics in many of the company's models that "punish the consumer" to meet cost cutting targets.

Ah yes, but what is this about Project D? According to WSJ sources, Mr. Nardelli and Jim Press are drawing up plans for a crash program, called Project D, to replace the Sebring. There is no telling who these sources are, but rumors have been rampant that Chrysler may give the new Sebring a complete makeover. Would that plan include renaming the vehicle something else?

Fixing the Sebring is just one of the many fires that Chrysler executives are trying to put out. Wringing out cost savings without resorting to soda pop bottle interiors is another task at hand. To help the situation, Mr. Nardelli has brought in ex-Home Depot executive, John Campi, to assist in purchasing. Apparently, Mr. Campi is pushing to buy more parts from Asia including batteries which are difficult to ship and prone to losing their charge in transport.

Chrysler is also looking to dispose of about $1 billion in land, old plants and other assets, even if it means selling them at fire sale prices. "Cash is king," says Mr. Nardelli.

There are also whispers of Chrysler and Nissan joining into some sort of arrangement that could have the companies building pickups and small cars for each other. This scenario would have Nissan supplying something like the Versa to Chrysler and picking up the Ram pickup and perhaps a minivan in return.

The WSJ article also mentioned Wolfgang Bernhard who was retained by Cerebus and initially looked to be taking a great interest in Chrysler. However, after learning that Mr. Nardelli, an automotive novice, was tapped for the CEO position, Wolfie apparently backed away.

So, what about the positive side? Well, this Forbes article paints a rosier picture. It talks about Nardelli ordering, in one day, 200 engineering changes to fix an array of problems and make improvements. Chrysler is also looking to spend money on enhanced features in future products. Management approved an LED tail lamp for the 2011 Grand Cherokee in a move that one Chrysler engineer called an “Earth-shattering moment in time.”

Chrysler has created a “Chief Customer Officer” position which will be guided by the voice of the customer. Engineers are being pushed to quickly identify quality issues that crop up in customer cars and find/implement solutions quickly. I hear about the focus on quality, but yet in the company's brand new 2008 minivans customers are ending up with missing seat heaters and mismatched taillights. Not exactly confidence inspiring stuff.

So much remains to be seen, but the decisions being made now and into 2008 will probably seal the company's fate one way or the other. If Chrysler can bring up quality levels, make needed improvements in its cars interiors and most importantly I think think, dream up relevant, gotta have future products then I think Chrysler will be fine. However, anymore more bungled launches like the Sebring and even the three headed dog won't be able to save it.

1 comment:

Anonymous said...

I hope Chrysler survives. I love their products, but I can't make sense out of their product lineups. The Dodge Avenger is a winner, but it's cousin, the Sebring is a dog.
And what's the point of a $40,000 Challenger? To tease the working stiffs who drool over such a car but can't plunk down 40 Gs for it? Why didn't they (or will they?) slide in that relatively new, but reliable 4.7 V8, or even their 3.7 V6, and price it for the rest of us?
Will a 6.1 Hemi muscle car sell in the era of $4/gallon gas?
I love Chrysler products and will welcome corporate ears who will listen to those like us who are loyal to the pentastar!