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Chrysler Downsizing - A Path to Profitability?

Kirstie_HKirstie_H Posts: 10,890
edited March 10 in Chrysler
Chrysler to Cut 13,000 Jobs.

Will a leaner Chrysler be a meaner Chrysler?

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  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    Good forum Kirstie........ :)

    Well I think with a reduction in 400,000 jobs :cry: and 20 new models coming out by next year they can be profitable by 2009. ;)

    Kirstie, it's going to boil down to quality of those products where I still see a problem with the current line-up. They just look cheaper on the inside than GM or Fords. ;)

    Just my $0.02.....

    Rocky
  • nippononlynippononly SF Bay AreaPosts: 12,692
    they clearly had a MASSIVE need to downsize. But that alone is not a path to profitability. As Rocky mentions, the insides of Chryslers are notably harder and cheaper than almost everything else out there. Fuel efficiency seems to be close to last on the design priority list. In fact, more than even GM or Ford, they still seem to be stuck in the "horsepower wars" mentality that defined the 90s, the era of cheap gas (which is now over - hello Chrysler?). They had one great idea (the 300C) in the 00's which is now selling at deep discounts with its 17/25 EPA rating. In fact, Chrysler seems to be the "one great idea" company - it was minivans in the 80s, the PT Cruiser in the 90s - they have one great idea which somehow saves them every time they fall back into the red because of poor product management or quality.

    With the announced placement of Chrysler on the auction block by Daimler, I would say Chrysler is about to go through a long period of the doldrums before they can begin to hope for profitability again.

    Let's hope they don't get sold to the Chinese this time. Chery is just itching to buy up an "American" firm, and heck, they already have partnership plans in place...

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • lemkolemko Posts: 15,185
    ...I went to the Philadelphia Auto Show the past two weeks and couldn't believe the proliferation of Jeep models, not to mention SUVs and SUV-like vehicles among the other divisions. The Dodge Avenger and Chrysler Sebring are much more attractive in person, but the interior materials are pretty poor - especially on the Dodge. I'd have much rather have seen that money spent on a better interior for the Avenger/Sebring than on another iteration of the Jeep. How many different ways can you make the same sandwich anyway?
  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    Well maybe lemko when GM, buys them we can get a decent interior. :) Maybe we can get a Dodge Stealth with AWD/4WS with a GM emblem on the door to whip a little tail.

    How bout a General Motors built Chrysler Imperial ? :shades:

    Rocky
  • nippononlynippononly SF Bay AreaPosts: 12,692
    NO KIDDING on the whole Jeep thing - they definitely got a bit carried away, with both a Dodge version of the Liberty AS WELL AS the Patriot and Compass. I personally don't think anything called "Jeep" should be a crossover. In the language of Jeep, everything under that brand should be "trail rated". If they want to build Jeep-ish crossovers, call them Dodges, heck make a nicer version and call it a Chrysler too if you want. Poser Jeeps never go down well.

    And Avenger is a heck of a strong name for such a wimpy car as a rebadged FWD Sebring. Straight to the rentals with that one, I say. The Sebring's interior is bad enough, I can't even imagine how bad the Dodge's must be.

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    heck make a nicer version and call it a Chrysler

    How bout a GMC Jeep Denali :blush:

    Rocky
  • nippononlynippononly SF Bay AreaPosts: 12,692
    Let's not get too carried away here. The very worst thing that could happen to both companies right now is for one to buy the other.

    This is exactly the kind of thing that happens at GM all the time: they make a new plan to rescue themselves, and 12 months on they say "Nah. We've had a better idea". 2006 was the first time that model changed - GM made a plan and stuck to it through thick and thin (and there were A LOT of times when sticking to that plan must have been murder). They CANNOT afford to change course now by fooling around with this Chrysler thing. If Chrysler wants to woo an American buyer, let 'em go talk up the Ford family.

    GM has partnered heavily with overseas partners to get a better product mix for new times, now Ford is beginning to incorporate its overaseas subsidiaries more too. Chrysler HAS to do this more to survive. Their partnership with Hyundai (more recently) and Mitsubishi served them well for many years I think. Perhaps those are not the best foreign partners now, given their particular circumstances, but I will bet others can be found.

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    nippon, I respect your opinion and can see why you feel the way you do. My biggest fear is nippononly, is the Chinese getting their hands on Chrysler, and using it's vast dealership network to kill GM, with Chinese imports. Leaving Chrysler Corp. for the pickings for the Chinese would be automotive suicide and the Chinese, will use Chrysler Corp's know how to build and sell Dodge Trucks, SUV's, Cars, some perhaps made here? and probably many made in China. If you were GM, are you willing to risk giving up your North American market to the Chinese ???? They pay pocket change for labor and they can reverse engineer a Dodge Ram build it in China, for a fraction of the cost and put a high quality interior in it for a fraction of the cost and sell you a Chinese Ram Hemi 4x4 loaded out for $25,000 and make more profit than GM, selling their trucks for $10-15K more with a artificially weak currency.

    This is my fear. Buying Chrysler, might not be the smart est move for GM, but they are set up a lot like GM, was 3 or 4 years ago. I think it's a option worth exploring if they can pick them up for a good price and eliminate a main competitor for Chevy, Pontiac, Buick.

    I might be wrong on my assessment but it's the way I see it right now. ;)

    Rocky
  • dtownfbdtownfb Posts: 2,915
    So I understand it, you want GM to spend billions of dollars (which they don't have) to buy a company just so the Chinese won't get it???? And what is GM suppose to do with this 800 pound gorilla once they get it? GM can't afford pet projects right now.

    I went to the auto show about 3 weeks ago and saw what Chrysler was offering. There is nothing in the Chrysler lineup that would benefit GM or Ford or the Chinese. maybe the 2008 DC minivan but even the outside styling is questionable. Chrysler is in serious, serious trouble.

    GM is heading in the right direction but not out of the woods yet. they cannot afford to divert their attention away from their plan. They still need to sell more cars to private citizens...without rebates. Something they haven't done in a while. Yes they have some nice products but the sales are still going down. It will take another two model years to improve this as they adjust their fleet/rental sales and people finally realize that it's not the same GM. As long as they stay the course, they will be a much stronger, efficient company in five years. Then they can worry about ways to reclaim the number 1 position from Toyota.

    Do you think Americans are ready to accept a chinese made car? We are still having reservations about a Korean-made car. and their cars are actually nice and have the best warranty in the business. I think your fear is greatly exaggerated.
  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    dtownfb, good reply...... :)

    I think your fear is greatly exaggerated.

    I just hope you are right ! ;)

    Rocky
  • dtownfbdtownfb Posts: 2,915
    I think you may have better sources than I:

    http://money.cnn.com/2007/02/16/news/companies/chrysler_gm/index.htm?cnn=yes

    I still don't get it. GM does not need Chrysler.
  • If there is a divorce between Chrysler and Daimler, then of all the "big three", Chrysler would be the worst off because they really don't have good small car technology available to them.

    Please take a look at my posting on a possible Chrysler-Fiat partnership in this forum entry:

    http://townhall-talk.edmunds.com/direct/view/.f11aef6

    If a Chrysler-Fiat tie-up were possible, they would have access to desirable compact/sub-compact cars like the Fiat Grand Punto and the new Fiat Bravo, which should compete well against the likes of the Mazda 3, Toyota Yaris, new Ford Focus, Honda Civic, etc. They even have a small "life-style" vehicle, like the BMW Mini, in the guise of the Fiat 500:

    http://en.wikipedia.org/wiki/Image:2008_fiat_500.jpg

    You can find out more about all Fiat cars available at their web site at http://www.fiat.com.

    Chrysler doesn't have a great deal of time and even a joint-partnership with Chery still means coming up with an all new car. So, in my opinion, Chrysler would be best served by choosing from a range of Fiat cars, concentrate resources in getting them U.S. safety/emissions compliant and badge them as Chryslers (some domestic developed vehicles badged as Dodge).

    As to where to manufacture some of these cars, re-tooling in the U.S., Canada, South America or even China (Chery Motors) are possibilities.

    YipYipYipee
  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    I see many reasons why they want it and I've looked at the negatives but IMHO, the positives out weigh the negatives. ;)

    I've taken heat from my friends on here. Trust me I'm getting hammered for thinking this is a good thing. I thought about it last night a lot and came to the conclussion that I and GM management is right this time. ;)

    Rocky
  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    GM, has a good European and Aussie portfolio to give Chrysler. ;)

    I'm not the slightest bit worried about finding product for Chrysler's traditional car names. ;)

    Rocky
  • dtownfbdtownfb Posts: 2,915
    You could be right. I just don't get it. Of course they are only talking. We know GM was also talking with Nissan.
  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    The difference between Nissan's deal and this one was Wagoner, was forced to talk to Nissan via Kerkorkian, who strong-armed the GM board. ;)

    Rocky
  • Hi, Rocky.

    GM's products for Europe and Australia, at least for compact and sub-compact cars, are essentially derivatives of Opel or GM/Daewoo vehicles.

    GM has already identified the Opel Vectra as the Saturn Aura, and there are GM/Daewoo cars, like the Chevrolet Aveo, already sold domestically and Europe.

    In my opinion, it will be a challenge to diversify unless GM adds more platforms to enhance greater differentials between brands.

    YipYipYipee
  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    Well they could buyout Ford also :P

    Ford, has plenty of European, Aussie platforms GM, could use. :blush:
  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    yipyipyipee,

    BTW- Hi and Welcome :)

    Rocky
  • nippononlynippononly SF Bay AreaPosts: 12,692
    I know Rocky was so worried about Chrysler getting sold to the Chinese that he kind of hijacked this thread talking about the GM buyout thing. But that topic actually has its own thread, and I am genuinely curious to hear peoples' opinions about whether they think that what they have seen in Chrysler's future product portfolio, in addition to the downsizing they have just announced, will get them out of the woods.

    What weighs on my mind is all the leftover unsold '06s still sitting on lots all around Motown. Especially the Grand Cherokees, Rams, Dakotas, and Durangos. These have represented a great deal of sales volume for DCX in the past,and there are no updates for them coming soon. What Chrysler has done, however, is killed the fleet-fave SWB Caravan for '08, which will reduce sales a lot (but maybe not profit so much).

    My opinion is that they need a whole lot better set of upcoming product debuts than they do have.

    I would say the chances of GM actually buying Chrysler are less than our individual chances of winning the lotto, but what about the general threat to Chrysler of being put up for sale by Daimler in the future? Is there anything Chrysler could do in the short term to show a profit and thereby avert that eventuality?

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • rockyleerockylee Wyoming, MichiganPosts: 13,989
    Nippon,

    I've read that DCX, is planning on shairing more Mercedes platforms to improve product. I would think that would be pretty expensive though ? I guess they have no choice but to shair, right ?

    Rocky
  • nippononlynippononly SF Bay AreaPosts: 12,692
    Rocky, I think in the late 90s it seemed to Daimler like it could rescue Chysler from itself. A decade into ownership, Daimler has realized it can't. Looking at the current product, sales results, and future plans, I can't help but agree. I think Daimler is serious about dumping Chrysler ASAP, unless it sees a serious commitment and concrete plans to and for a turnaround.

    So the answer to your question is that I disagree, right now Daimler DOES have a "choice but to share". It can plan the divorce instead.

    I would like them to dump all the chaff (Chrysler and Dodge) and keep the wheat (Jeep). I think the two (Daimler and Jeep) could complement each other very well, and Jeep being a niche brand wouldn't be an anchor around their neck the way Chrysler and especially Dodge are. Maybe Chrysler could sell Dodge, by far its worst-performing brand in terms of profits and days in inventory, to VW (or Chery)instead. :-)

    I guess bottom line is, IMO Chrysler is NOT on the path to profitability, despite all the cuts just announced. :-(

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • dtownfbdtownfb Posts: 2,915
    My personal opinion is without a sale Chrysler will be gone in a couple of years. They just released two cars that received "luke warm" responses at best; the Sebring and Caliber. They are releasing the Aspen which is based on the Durango which as you mentioned still has 2006s sitting idle in Motown. What they are doing with Jeep reminds me of that leftover 20 pound turkey at Thanksgiving. How many dishes can we make to use up the turkey? And can we stop with this stupid "Hemi" marketing??? Not buying that this is some great engine. Gas is no longer $1.50. How about a fuel efficient engine?

    The upcoming minivans look good except I am not keen on the outside styling but it appears they addressed many of the other concerns. It should allow them to stand toe to toe with Honda and Toyota. OF course, this is a dwindling market so you can only pick up so many sales. Plus with the incentives needed to move them, I don't see much profit from these vans. The biggest problem they face is the Toyota Tundra. I can see the Silverado and F150 holding on to their sales but the Ram is in trouble.

    At least Ford has the Fusion and the Edge that are pretty nice vehicles. The F150 always sells. The new Escape will be out this spring. And Volvo still remains popular. I can see them making a turnaround, although painful.

    Daimler sees the writing on the wall and knows they need to unload this division. When you rely on fleet and rental sales to move cars, IT is very hard to change that trend. They will need to continue making cuts (control production), get relief from the union and improve their products. The problem is do they have enough money to improve their products.

    Like I also state, this is simply my opinion based on what I say at a recent car show. I could easily be wrong. I see more negatives with Chrysler and no solutions.
  • Thanks for the warm welcome, Rocky.

    DTOWNFB and you have some interesting thoughts and comments. Indeed, I'd have to agree with DTOWNFB's assessment in that Jeep is what GM wants, or is what Daimler wants to keep.

    This reminds me of the debacle which was Rover (UK) then owned by BMW. Rover (really the parts thereof) is now owned by a Chinese automaker, churning out copies of the Rover 75 and at last recollection, the MGF.

    YipYipYipee
  • grbeckgrbeck Posts: 2,361
    nippononly: Rocky, I think in the late 90s it seemed to Daimler like it could rescue Chysler from itself. A decade into ownership, Daimler has realized it can't. Looking at the current product, sales results, and future plans, I can't help but agree.

    Daimler is responsible for Chrysler's current mess. Daimler has been in completely in charge for the last five years. Chrysler's management has been hand-picked by Daimler; the parent company has signed off on the new vehicle programs; all of the new vehicles bear the mark of Daimler's approval.

    This latest downturn only confirms my belief that the Europeans have no clue on what it takes to compete in the American mass market. Several of my relatives are German (one even works for Opel). Through their comments I know that they believe that Americans will accept lower quality vehicles, as long as the price is right. Look at the new Sebring and Compass, and you can see that mindset embodied in steel, glass, rubber and plastic (the cheap variety of plastic).

    The appeal of Toyota and Honda - as well as the reasons behind their great success in America, and growing appeal in other markets - is completely lost on them. They look down on Japanese cars (even though European quality reports have mirrored their American counterparts by showing serious reliability problems with VW and Mercedes-Benz, while putting Toyota and Honda at or near the top). In many ways, their attitudes remind me of those exhibited by Americans during the 1960s.

    Chrysler's latest (and possibly its last - gulp!) downturn is not a reflection on American management. It is reflection on the leadership provided by the headquarters in Germany.

    At this point, I wouldn't be surprised if Chrysler is slowly dismembered, with various parts ending up in the hands of other manufacturers. The Hemi V-8, Dodge trucks and Jeep are the prizes (much like the MINI and Land Rover were the only worthwhile parts of Rover). I can't see anyone outside of the Chinese wanting the passenger car business.
  • Reuters reports Fiat's CEO, Sergio Marchionne, has "Zero" interest in Chrysler.

    OK, well that means Fiat has no interest in buying Chrysler, but I still thank some sort of licensing may still be possible.

    YipYipYipee
  • Interesting comments.

    "I can't see anyone outside of the Chinese wanting the passenger car business."

    Yes, the Sebring and Compass are very disappointing products, as is the Crossfire to a degree (i.e. attractive enough exterior, disappointing interior).

    So, we could be looking at a scenario where the Chinese buy the Chrysler brand, license Fiat Grande Punto and new Bravo cars (assembled in South America, from parts made in China and India), then import and badge some of them as Dodge... Global industrialization gone mad!

    YipYipYipee
  • carguy58carguy58 Posts: 2,303
    Its a terible idea. Ok I have been thinking about this all day about GM buying Chrysler and the negatives outweight the postives:

    1.) Does Gm really need 8 brands? I mean they already have five so if they buy Chrysler they'll than have Chrysler, Jeep, and Dodge. Thats ridiculous what automaker needs 8 brands? GM has already put a stop mostly to product overlap mostly and now they want 8 brands? I don;t understand it.

    2.) How is GM going to pay all of all Chrysler's workers or maybe lay them off. GM has already has already gone through pension problems with healthcare and now they want to interhit all of Chryslers workers? What? This doesn;t make any sense to me.

    3.) The Domestics already have too many dealersips and now GM wants to inherit all of Chrysler, Dodge, and Jeeps dealerships. (in my opinion)Why? Gm already spent money closing down Oldsmobiles dealers when they decided to kill Oldsmobile in 2002-2003. So my thing is why does GM need to deal with additional dealers with the Chrysler, Jeep, and Dodge? So what I'm saying is say GM wanted to kill the Dodge brand they would have to spend money to close all the Dodge dealers. Why would GM want to do something like that (close all the Dodge dealers)and why would GM want the burden of having more dealers since they already have more than they need.

    4.) The UAW cannot be happy right now that GM is thinking about buying Chrysler because like I said above GM is gonna have to lay off some workers if they buy Chrysler and the UAW has already cut so many deals for the Domestics of late and are they(the UAW) are going to be willing to cut more jobs again? I don;t think so.

    5.) Supply and Demand-Chrylser and GM do not have demand for their vehicles like Honda and Toyota.

    6.) Both GM and Chrsyler have the same problem: relying on mid-size SUV sales for the chunk of their sales when that market has been on the decline for the past year or so.

    I say let investor Kirk Kerkorian buy the company I think he can do a good job for Chrysler.

    Out of all the automkers that I see that can benefit from buying or merging Chrysler I don;t see one right now.

    Rockylee: I know you are a big GM fan but I don;t see how GM benefits from this aqusition at all. To me an auto company does deals to benefit their business but I don;t see how buying Chrysler benefits GM at all.
  • Interesting thoughts.

    "Does GM really need 8 brands?"

    No. They don't. In any case the only brands/products of any interest would be in Jeep, and a couple of models from the Chrysler and Dodge line.

    "GM has already has already gone through pension problems with healthcare and now they want to inherit all of Chryslers workers?"

    It is expected that with the spin-off of Chrysler, Daimler would pay for the pension obligations, but not necessarily health care benefits.

    "Why would GM want to do something like that (close all the Dodge dealers)and why would GM want the burden of having more dealers since they already have more than they need."

    One way of looking at it is gaining market share, which you pointed out, wouldn't be for "free". Indeed, closing dealerships is a double-edged sword. It would give competitors like Toyota, Kia, Hyundai access to cheap, purpose built properties to compete with GM dealerships. Sometimes right next door.

    "UAW has already cut so many deals for the Domestics of late and are they (the UAW) are going to be willing to cut more jobs again? I don't think so."

    The UAW is in tough spot right now. On one hand, they have competition in the form of non-union factories that Toyota and Honda have established, offering workers fair pay, excellent benefits and input on what's being built. On the other hand, they play a big part in the destiny of the "Big Three". Indeed, they have a choice of losing the battle and perhaps winning the war. In other words, help the manufacturers in these difficult times or help bankrupt one or more of the Big Three.

    "Chrysler and GM do not have demand for their vehicles like Honda and Toyota."

    In hindsight, GM and Chrysler (really Daimler) realized they got complacent. They didn't lead in design and technology (Actually GM did. Go rent the movie "Who Killed the Electric Car" if you haven't already done so.) And apparently they didn't prepare in the event petroleum prices would go up dramatically. And yes, Ford was caught napping too.

    However, GM and Ford are global car manufacturers. So, they were already in the business of making fuel-efficient vehicles.

    For the most part, Chrysler is a domestic manufacturer, and strategically the worst off. Indeed, what technology and parts Daimler-Benz brought to the party, were for cars like the Dodge Magnum and Charger (both are based on an old Mercedes E-Class platform).

    I'm sure Kirk Kerkorian is feeling a bit reticent in buying Chrysler right now. He's still licking his wounds in trying to get control of GM. On the other hand, since he knows mortality is staring him in the face, he may just say the hell with it, buy Chrysler anyway and hopefully turn it around. One last cornerstone for his legacy.

    YipYipYipee
  • lemkolemko Posts: 15,185
    ...if I had Kerkorian's cash, I'd do it only on the condition I get to determine what the vehicles would be like.

    First, I'd kill of all the excess Jeep models. How many different ways can you make a ham and cheese sandwich anyway?

    For Dodge - I'd kill off the Nitro and get a suitable compact car to replace the Caliber. I'd definately would rework/redesign the Avenger and give it a world-class interior that would make that of a Honda look like a 1987 Hyundai Excel. I'd also bring back the regular Dodge van and dump that stupid, clumsy, top-heavy Sprinter. I'd seriously consider dumping the Durango. If people want an SUV, they should go to Jeep. Love the Challenger and Charger.

    Chrysler - immediately kill the Aspen. Chrysler does not need another SUV and one with a name that has a bad past. I'd also rework/redesign the Sebring. I'd get rid of the stupid fluted hood that didn't work for the Crossfire. I'd work on a new design for the 300 and probably rename the lower-end models Newport as not to dilute the 300 image.

    Imperial - I think a "poor man's Phantom" would definately sell here. I'd just clean up some of the details and sleeken the proportions.
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