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For Chrysler, redoing brands just a start

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For Chrysler, redoing brands just a start

November 25, 2007



Forget about dropping or radically redefining brands. Chrysler LLC needs to focus on patching the holes in its model line, sharpening the definition of its Chrysler, Dodge and Jeep brands and developing first-rate vehicles to cure what ails it.

"It can be done," said Jim Hall, managing director of 2953 Analytics, a Birmingham-based industry analysis firm. "Chrysler can become a premium brand, Dodge could appeal to younger buyers, and Jeep could be the tough, off-road brand."


The widespread expectation in the industry is that Chrysler management wants to have fewer dealers, with all of them selling all three of its brands. The automaker currently has two separate networks: one for Dodge and one for Chrysler and Jeep.

This will require dropping some models, but Chrysler builds an abundance of cars and trucks nobody will miss. The tough part of the job will be giving its Chrysler and Dodge brands distinct and appealing identities, building vehicles that live up to that image and reducing its number of dealers drastically.

Putting all three brands under a single roof would allow Chrysler to eliminate the overlap that saddles it with vehicles that compete with each other.

"If you've got three brands in one building, you need better differentiation among their models," said Michelle Krebs, editor of AutoObserver.com.

Consider the Dodge Durango and Chrysler Aspen SUVs. Through October, Durango sales had fallen about 20,500 from 2006, and Chrysler had sold just 24,251 Aspens. Chrysler's net return for the millions of dollars invested to develop, market and build the new SUV was a measly 3,735 sales.

You don't have to be Alan Greenspan to recognize the Aspen as a deadbeat deficit spender.

That's not to say Chrysler's strategy of building several different models -- "top hats" the company calls them -- on a single set of components should go. It can work brilliantly, as demonstrated by sales of the Dodge Charger and Chrysler 300 sedans, or the Chrysler Town & Country and Dodge Grand Caravan minivans.

The strategy's success requires better product planning -- the process of deciding which vehicles to build -- and better product development to make sure the new cars and trucks Chrysler builds are first rate, however.

"What does Chrysler need to sell vehicles profitably?" Hall said. "When you winnow out the overlap, the open spaces for new vehicles become clear."

One of those spaces is the size of a Ford Escape or Chevrolet Equinox compact crossover SUV, he said. Instead of developing a vehicle that size with a V6 engine to compete with the market leaders, however, Chrysler chose to build two compact Jeeps -- the Compass and Patriot -- with limited off-road ability, barely average four-cylinder engines and marginal transmissions. Both are respectable vehicles, but neither is the home run it could have been.

The upcoming 2009 Dodge Journey crossover SUV could be a belated competitor for the Escape and Equinox, but it's bigger than they are, and we won't know until Chrysler reveals its price.

In addition to a small crossover SUV, Chrysler should add a larger model of the same kind to compete with vehicles like the Honda Pilot, Saturn Outlook, Toyota Highlander and the upcoming Ford Fairlane, all of which offer more passenger capacity than the Journey.

"The crossover segment is ripe for a styling breakout," Krebs said, alluding to one of Chrysler's historical strengths. "They have to get the interior right as well, though."

Chrysler also desperately needs a high-mileage small car, Krebs said. The company is developing a subcompact with Chinese automaker Chery, but there's no indication if it will be sophisticated enough to sell to American customers.

"They need an entry-level car," Hall agreed, "and they are over-covered in compacts with the" Dodge "Caliber, Compass and Patriot."

Figuring out which models Chrysler should drop is the easy part. Identifying and developing the vehicles that will return the company to health is the real challenge.



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As far as front wheel drive compact class vehicles, Dodge should be the only brand to offer these vehicles. The next generation Caliber should be morphed into a proper compact crossover (not straddling the line between hatchback and crossover). Dodge should then complement it by offering a family of compact class products, including a sedan, coupe, and either a 5-door hatchback or wagon. I think Chrysler LLC has dropped market share by offering 4 hatchback/crossover type vehicles by three different brands. I think it could do more by offering more variants (crossover, sedan, coupe, and hatch/wagon) by one brand.

If I was Chrysler LLC, I would work with Mitsubishi or Hyundai on developing a subcompact class product (preferably Hornet) for Dodge. These two companies have available platforms and more market cred than Chery. By the time Chrysler LLC finishes fooling around with Chery about creating a vehicle suitable enough to sell outside of China, the subcompact market will be full of established models that dominate the segment. This will make it harder for a Dodge product to make an impact in the segment.

The PT Cruiser needs to either be discontinued entirely or morphed into a slightly larger, more upscale product on a front wheel drive midsize platform. It doesn't serve as a proper entry level product for a near luxury brand in its current form.

The Compass and Patriot need to be discontinued so that Chrysler LLC can restore Jeep back to its rugged, off-road capable brand image. After the Grand Cherokee is redesigned to be a proper seven passenger product, then the Durango and Aspen can be discontinued. Jeep should remain a niche performer in the market offering a lineup of 3-5 traditional SUV based products. Jeep should be the only brand to offer traditional SUV products (which means Nitro should also be discontinued).

Edited by cire

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"It can be done," said Jim Hall, managing director of 2953 Analytics, a Birmingham-based industry analysis firm. "Chrysler can become a premium brand, Dodge could appeal to younger buyers, and Jeep could be the tough, off-road brand."

Someone gets the concept, but you don't sell premium vehicles in the same showroom as economy cars. That is why you have two dealer networks. Two dealer netowkrs make perfect sense if the product is different.

And yeah, it's all about the product.

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Dodge has a redneck or blue collar image. I love the Chargers and Challengers with the Hemi, but CAFE will kill these cars by 2015, so I agree with the proposed plan, even though everyone else here disagrees.

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Product lineup-wise Chrysler's current crop of offerings feels like 1979 all over again. Sure, the quality is vastly better, but the range is full of gas-guzzlers just like in 1979. Meanwhile, world oil production is leveling out while demand keeps rising in China, India, etc. Gasoline is set to go much higher much faster than anyone realizes. Just in time for the Challenger and redesigned LYs. Chrysler better get a very flexible K-car ready or it will be a hollowed out Nissan buyout candidate for its remaining "strengths" (Jeep, Ram and minivans).

BTW, this goes for Pontiac as well. Better fill the lineup with 4-cyl turbos instead of V-8s and V-6s.

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