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Do IT this week: Layering
Automaker to revamp fading Sebring and Avenger before 2013 replacements
By Alisa Priddle
Detroit News
Published on Tuesday, Nov 17, 2009
Chrysler is counting on significantly higher sales of its mid-size sedans to meet ambitious growth targets outlined last week in its five-year business plan, but the automaker has not been competitive for at least a decade in the market's largest vehicle segment.
Chrysler, whose U.S. sales have fallen 39 percent this year, has been particularly stung by poor quality and consumers leaving for other brands.
Executives acknowledge the company cannot delay revamping the subpar Chrysler Sebring and its only slightly better sibling, the Dodge Avenger.
Demand is anemic — amid a 25 percent decline in U.S. auto sales this year, Sebring sedan sales have plunged 70 percent while Avenger is down 45 percent, according to Autodata Corp.
Yet Chrysler's management team, led by CEO Sergio Marchionne, has made mid-size cars a cornerstone of the automaker's plan to increase global sales and market share and return to profitability in 2011.
Today, mid-size models account for 23 percent of Chrysler's 1.3 million vehicle sales worldwide, but the company plans to increase that to 28 percent of 2.8 million vehicle sales in 2014, said Joseph Veltri, Chrysler's vice president of product planning.
In the U.S., mid-size sedans account for 22.9 percent of all auto sales; Chrysler plans to almost double its share of that market to 3.4 percent in 2014. It is a highly ambitious plan and analysts believe the odds are stacked against Chrysler.
''It's common knowledge the Sebring is the mid-size car to stay away from,'' said John Wolkonowicz of IHS Global Insight, a financial and marketing research firm in Lexington, Mass.
Chrysler executives say the situation calls for a two-part fix: The Sebring and Avenger will get refreshed interiors, exteriors and engines next year, followed by the introduction in 2013 of all-new replacements for the Chrysler and Dodge sedans. Those models will be engineered by Italian partner Fiat SpA and designed and built by Chrysler.
''Unless you are present in the [compact and mid-size] segments in the U.S. you are nobody,'' Marchionne said last week after presenting Chrysler's five-year plan. ''The problem with this organization is it does not have competitive cars in this segment.''
That's why Chrysler isn't immediately scrapping the sedans altogether. The current Sebring and Avenger have been on the market long enough to have paid for themselves, so refreshing them doesn't require wholesale new investment. But Mar
chionne says the cars cannot continue to be sold as they are now designed.
To help bridge the gap until the upgraded models go on sale late next year, Chrysler will introduce a customized Sebring Ocean edition, targeted at consumers in coastal states. It will be unveiled in January at the Detroit auto show and hit the market in the first quarter of 2010.
Analysts are divided on the wisdom of spending money now to fix vehicles that will be scrapped in a few years.
''They're throwing good money after bad,'' Wolkonowicz said, adding that he has studied the effectiveness of so-called mid-cycle changes ''and they are a waste of money.''
The sedans must look new and different, and probably have new names, he said. ''Without a drastic new exterior, you won't get people in to appreciate the new interior and better engine.''
If the improvements don't elevate the product, ''they are better off not having it,'' said Stephanie Brinley, a product analyst with AutoPacific Inc. in Troy. ''Continuing with a mediocre product has the potential to be more damaging than useful.''
Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, Mich., put it even more bluntly: ''No marketing can save the Sebring.''
But the sheer size of the mid-size segment and forecasts of continued growth leave Chrysler little choice, said Michael Robinet, vice president of global vehicle forecasts for research firm CSM Worldwide in Northville, Mich. ''Having an anchor vehicle in that segment is critical to success in this market.''
Chrysler has not had a credible mid-size contender since the ''K'' cars of the early 1980s — the Dodge Aries, Chrysler LeBaron and Plymouth Reliant.
Mid-size cars have been the largest vehicle segment for decades, he said, and ''it's likely to be the volume leader for most companies for a number of years.''
Chrysler could have waited for the all-new models in 2013, Marchionne said. ''Or I could have invested in the Sebring platform now to bring it back and effectively take out everything that is bad in the architecture and rebuild the car around the existing architecture.''
Chrysler is counting on significantly higher sales of its mid-size sedans to meet ambitious growth targets outlined last week in its five-year business plan, but the automaker has not been competitive for at least a decade in the market's largest vehicle segment.
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