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Do IT this week: Layering
Analysts say struggling company's cars have no cutting-edge designs
By Tom Krisher
Associated Press
Published on Wednesday, Nov 05, 2008
DETROIT: In crises past, Chrysler has somehow managed to stamp out a blockbuster hit vehicle to pull itself away from the cliff's edge.
But as it faces a possible sale to another automaker and what might be the most serious problems in its 83-year history, industry analysts say there's nothing in the current product portfolio that looks like a savior.
Chrysler's U.S. sales are down 25 percent through September, the worst decline of any major automaker. Losses are mounting: well over $1 billion for the first half of the year.
Chrysler has said it wants to shed a quarter of its salaried work force, and its owner, Cerberus Capital Management LP, is talking with General Motors Corp. and others about a sale.
Of Chrysler's 26 models on sale in both 2007 and 2008, only four have sold more this year than last, and three of those are small-volume niche vehicles such as the Dodge Viper. The company's market share has dwindled from 16.2 percent in 1996 to 11 percent this year, according to Ward's AutoInfoBank.
Analysts say there are no cutting-edge designs or potential big sellers in sight to rescue the maker of the Chrysler, Dodge and Jeep brands.
The smallest of Detroit's three automakers, once-brash Chrysler took risks and gained big rewards for vehicles like the 300 full-size sedan in 2005. The company invented the minivan when it introduced the Plymouth Voyager and Dodge Caravan in 1984. The Plymouth Reliant and Dodge Aries ''K-car'' sedans of 1982 helped earn the money to repay $1.5 billion in government-guaranteed loans that saved Chrysler from going under in 1980.
''If Chrysler has another hit on the way, I am unaware of it,'' said David Lewis, professor emeritus at the University of Michigan, who followed the auto industry and taught business history for 43 years until retiring earlier this year. ''Oh, for the days when the minivan was an instant home run, and Chrysler owned that highly profitable market segment.''
With little in its product
pipeline, a slow economy and the worst U.S. auto sales slump in 15 years, analysts say that's why Cerberus is shopping the company to GM and others. Chrysler also has a lineup tilted toward trucks and sport utility vehicles when customers are buying mainly fuel-efficient cars.
''In many ways this really looks like the end of the road for Chrysler in the way that we know it,'' said Aaron Bragman, an auto analyst with the consulting company IHS Global Insight. ''They are going to face a change in ownership, that is a certainty. From what we hear, product development is on hold because of the uncertainty.''
Chrysler's lackluster products, said Bragman, can be traced to the nine years it was owned by Germany's Daimler, which approved chintzy interiors and cars with more noise and vibration than the competition.
''The truth is Daimler did them no favors,'' said Jim Hall, managing director of 2953 Analytics of Birmingham, Mich. ''They approved products that previous Chrysler management wouldn't have approved if they were completely drunk and beaten crazy.''
Under Cerberus, which bought 80.1 percent of Chrysler from Daimler AG in August of last year, the automaker has tried to improve its products. Its latest vehicles have far nicer interiors, especially the new version of the Ram pickup.
But quality concerns still haunt Chrysler. Nearly two-thirds of its model lineup were below average in Consumer Reports' annual vehicle reliability rankings this year. The Chrysler Sebring sedan was the worst-rated car.
Through the first nine months of this year, Chrysler sold 1.18 million vehicles in the U.S. — 395,304 less than the same period last year.
Chrysler's leaders say they have made cuts to stem negative cash flow and have slashed factory production so the company isn't producing more vehicles than it sells. Despite the large losses, they say Chrysler is meeting its internal goals.
The company is banking on the new Ram to pull it out of sales doldrums, but its release this fall coincided with one of the worst pickup markets in years. Chrysler also says it is making big strides on quality and plans to bring out seven new products in 2010, including a subcompact made by Nissan of Japan.
In September, Chrysler surprised the industry by showing off three electric vehicle prototypes and promising to put one in showrooms by 2010.
Hall says there are good products coming, and that in a normal auto sales market, Chrysler could survive on its own. But now, like GM and Ford Motor Co., it's all about having enough money to survive until the economy recovers and auto sales are revived, he said.
Bragman, however, has less faith.
''I do not believe that it is a healthy company and everything's on track and all they simply need to do is wait it out,'' he said. ''Healthy companies that are on track don't slash one-quarter of their white-collar work force.''
DETROIT: In crises past, Chrysler has somehow managed to stamp out a blockbuster hit vehicle to pull itself away from the cliff's edge.
Get the full article here.
Comments
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Posted 03:51 AM, 11/05/2008
What about all those buyers that bought Chryslers with a three year guarantee of gas for $2.99 a gallon? I guess we really thought it would never come down.
