Sergio Marchionne mulling his next move (courtesy: chrysler)
"Mi sento male" (Italian for I feel sick) is probably what Fiat CEO Sergio Marchionne said after signing on the dotted line to acquire 20 percent of Chrysler. Marchionne told reporters at the Frankfurt Motor Show that Chrysler is worse off than expected,
“There's a whole pile of stuff that we didn't see when we came, that we were not expecting,” Marchionne is quoted as saying in The Globe and Mail. “Probably the single largest surprise to us was how little had happened in the past 24 months to get [Chrysler] competitive.”
Cerberus Capital Management basically went into a conservation mode once it became quite obvious that things were not going to get better. That means that while General Motors also declared bankruptcy, its product pipeline was not as impacted. Chrysler has very little in the way of new models with which to entice buyers. Just how many folks are going to clamor over a new 2011 Grand Cherokee or full size 2011 Chrysler 300? Until new Fiat-based product can be delivered to showrooms, Chrysler's best tactic will be to deliver a value message.
Years ago Chrysler made a push with airbags. My memory is a bit fuzzy, but the net effect was that all Chrysler cars had airbags even though it was not a government requirement yet. Chrysler could do the same thing again by committing that all vehicles would come standard with stability control, blind-spot detection and Bluetooth or similar gimmick. The bottom line is, in order to move metal you either have to have a hot product or a hot promotion.
As for Marchionne's "shock" at the condition of Chrysler, one has to have healthy amount of skepticism. It was fairly obvious to even casual observers that new product development had slowed to a trickle. There was the much ballyhooed "Project D" to replace the Avenger/Sebring sedans and the aborted partnership with Nissan, but other than the 2011 Ram heavy duty models, Grand Cherokee and 300 replacements it has been all quiet on the western front. Could Marchionne simply be setting up the company for another round of slimming cuts?