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At Chrysler, finally, signs of better days ahead

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At Chrysler, finally, signs of better days ahead

Automotive News -- April 5, 2010 - 12:01 am ET

Being a Chrysler Group stakeholder these days can be challenging. But for those who hang on, there are signs that better times are possible.

Suppliers are antsy to ramp up production.

And consider the issues facing some Chrysler dealers:

-- Sales are down because Chrysler's product lineup is old, and the factory isn't spending enough on marketing and advertising to move the needle.

-- Many dealers are struggling to keep their doors open until things improve, while others weigh whether it's worth it to stay in business.

-- There is uncertainty about what arbitration will mean to Chrysler's distribution network, especially in markets where the pre-bankruptcy Chrysler rejected dealerships and the post-bankruptcy Chrysler awarded new franchises.

-- Dealers at the 86 rejected dealerships that have been invited to rejoin Chrysler must find the ways and means to reopen their operations, most of which have been shuttered for 10 months.

Speaking at an industry conference in New York last week, Chrysler CEO Sergio Marchionne dealt with many of those issues, touting the alliance with Fiat as a way to turbocharge product development while conserving cash.

It seems to be working. Marchionne said Chrysler will break even on an operating basis this year while acknowledging that the company has been miserly with marketing and advertising expenditures to maintain a cash balance of $5 billion.

Marchionne revealed that the automaker plans to begin building the much-anticipated 2011 Jeep Grand Cherokee on May 3, with sales beginning in July. And in the fourth quarter the Fiat 500 and the re-engineered Chrysler 300 are scheduled to go on sale. It's not a product deluge. But one or two hot products can make a difference, especially with the sales outlook improving for the entire industry.

One big plus for Chrysler is Marchionne's experience rebuilding Fiat. He and his team know what needs to be done and have the discipline to do it.

Chrysler's stakeholders, including dealers, would prefer an immediate turnaround. But Marchionne's five-year plan cannot happen overnight. Nor is it likely that every dealer who takes arbitration will be satisfied with the outcome or that every dealer invited to return will choose to do so.

At least there is a solid plan that seems to be on schedule.

With the challenges at Chrysler come opportunities -- for those who can afford to wait.

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