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Chrysler Downsizing - A Path to Profitability?

Kirstie@EdmundsKirstie@Edmunds Posts: 10,677
edited March 10 in Chrysler
Chrysler to Cut 13,000 Jobs.

Will a leaner Chrysler be a meaner Chrysler?

Need help navigating? kirstie_h@edmunds.com - or send a private message by clicking on my name.

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Comments

  • rockyleerockylee Posts: 14,011
    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: 12,669
    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: 15,075
    ...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 Posts: 14,011
    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: 12,669
    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 Posts: 14,011
    heck make a nicer version and call it a Chrysler

    How bout a GMC Jeep Denali :blush:

    Rocky
  • nippononlynippononly SF Bay AreaPosts: 12,669
    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 Posts: 14,011
    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 Posts: 14,011
    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 Posts: 14,011
    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 Posts: 14,011
    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 Posts: 14,011
    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 Posts: 14,011
    Well they could buyout Ford also :P

    Ford, has plenty of European, Aussie platforms GM, could use. :blush:
  • rockyleerockylee Posts: 14,011
    yipyipyipee,

    BTW- Hi and Welcome :)

    Rocky
  • nippononlynippononly SF Bay AreaPosts: 12,669
    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)

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