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Insider: Another Wreck in Motown

A surprising financial loss and the parking of unsold vehicles in parking lots throughout Detroit wasn’t expected from Chrysler, a company that just a few years ago was riding high on the success of its innovative rear-wheel-drive passenger cars.

A surprising financial loss and the parking of unsold vehicles in parking lots throughout Detroit wasn’t expected from Chrysler, a company that just a few years ago was riding high on the success of its innovative rear-wheel-drive passenger cars. So what went wrong? Common wisdom would say gas prices increased and that sent sales of light trucks and SUVs, which account for the vast majority of Chrysler’s product range, falling faster than a penny tossed from the Empire State Building. That would seem to mitigate the responsibility of those at the top. But then there was the decision to launch even more SUVs, including the Chrysler Aspen and Dodge Nitro, so you can see that those at the top might be a little out of touch at what’s happening on the ground.

On the manufacturing front, Chrysler has touted its flexibility, but you wouldn’t notice that based on inventory levels for some of its laggards, including the Dodge Ram, Durango and Dakota. Which brings me to a question I have posed to several Chrysler executives over the past few years: Why does the Newark Assembly Plant continue to exist? There, workers assemble the Dodge Durango and Chrysler Aspen SUVs. Nothing else is flexed into the facility, even though the architecture for the Durango and Aspen is basically shared with the Dakota. When I toured the Delaware plant in 2004, one Chrysler executive admitted to me that he was worried about the long-term viability of Newark’s future based on the existing production plan. Yes, this situation was envisioned two years ago and no one did anything about it. I am sure the Chrysler folks would claim adding the Aspen will right the course, but that’s a bunch of hooey! Chrysler needs to get more flexibility built into its truck plants—fast. They could easily mothball Newark and maybe one other truck plant and still meet decreasing demand.

The next thing Chrysler management must do is kick the design team back into gear. How can they go from the Chrysler 300, Dodge Charger and Magnum to the Jeep Compass and Chrysler Sebring? When did the wheels fall off? Equally perplexing is the company’s inability to get serious about interior quality. A few years ago, while driving the Magnum with Chrysler’s recently ousted sales boss Joe Eberhardt, he candidly acknowledged the quality of Chrysler’s interior pieces was more than sub-par and change was coming. Where? The Dodge Caliber interior is reminiscent of a knock-off Rubbermaid container. Even GM has figured out making high-quality cockpits is a key piece of building customer acceptance. You know it’s bad when the auto company known as the one who forms a committee to study how to kill the spider in the room is leaps and bounds ahead of you.

Chrysler is supposedly studying plans for potential layoffs, plant closures and ways to shed $1,000 in cost from each vehicle produced. Those at the top must remember they cannot cut and gut their way to prosperity. They need to develop compelling products people want to buy; not something that is out of touch with the market and feels like something you’d find at Wal-Mart Motors. If a return to the top requires a change in the design office, so be it; same goes for manufacturing. Chrysler can return to its place as the design leader in the business, it just has to rebuild that sense of urgency that now seems missing. Chrysler’s top brass envisioned something like this might happen as the company rode high on its product success. During one frank conversation with a top-ranking executive it was conveyed that the upper echelons were patting themselves on the back repeatedly saying nothing could go wrong. An attempt to extinguish that bravado was made by conveying some recent customer complaints about Chrysler’s nagging quality. Momentary success does not erase the need for urgency, although it seems the guys at Chrysler didn’t get that message. Chrysler can still do what’s right to get its momentum back on track, although the window of opportunity is quickly closing. 

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