Chrysler President Jim Press Explain's His Company's Shrinkage
Friday, February 08, 2008JEFF YASTINE: It looks like Chrysler could reinvent itself as a smaller, more efficient company. The auto maker said today it's looking at a tentative plan to pare down its vehicle line up and shrink its dealer network. Earlier today, I spoke with Jim Press, president of Chrysler and began by asking him what is prompting the changes.
JAMES PRESS, VICE CHAIRMAN & PRESIDENT, CHRYSLER: What we're doing is we've got a new Chrysler and we're making sure that our company is the right size, the right product portfolio, the right dealer body to go forward and prosper and go forward and show the world that a domestic car company can take on the global best.
YASTINE: But you have no specifics at this point, correct? You don't know exactly how many fewer models of Chrysler vehicles there will be or how many fewer dealers will sell them.
PRESS: Not really. What we're doing is we're adjusting the company to reality. In the past, the capacity, the product portfolio, the dealer body, was all numbered for what they wanted to sell, not what they were selling. And the reality is that our volume is about 2.5 million cars a year. And we want to be the best darn little 2.5 million car company in the world, which means we can't duplicate products, like we need to sell 4 million. We can't have production capacity for 4 million or we can't have the dealer capacity because the business isn't there. So we're really right-sizing the organization and it is not just the dealers or not just the products, but the Genesis really covers the whole company, to get us in the competitive position where we can give customers world class products, give value, give quality and give the customers what they want.
YASTINE: Jim, how hard is it going to be, though, to get the dealers to either merge with each other, the Chrysler dealers, or for you to offer them buyout checks of some kind? What is the likelihood of either of those happening?
PRESS: The fact of the matter is we're going to sit down with the dealers by market area and we're going to discuss where the ideal dealership locations are with circles and dots are the dealerships that exist today and we're going to put our heads together to find out what makes the most sense, again to give the customers a good shopping experience, good service experience and not have the duplication of the regional capacity that is expensive and inefficient. And as we go forward and the dealers understand that if they don't have all three brands under one roof, it is going to be difficult for them to have the entire product portfolio, that they realize we have to have consolidation and we'll put our heads together and we'll work out solutions of where we might merge. We may turn some stores into companions. We may -- some may buy others. And we're going to do it that way, through the grassroots.
YASTINE: Jim, can you say whether or not these moves -- will they really bring Chrysler into true profitability?
PRESS: These moves will turn us into a company that works for the customer, that is market-driven and it will give us the opportunity not only for ourselves and our dealers to be more profitable, to invest in the future so we can have world class products, new technology, green products, safe products and give customers more than what they want, a great car.
YASTINE: That's the other part of this equation here, because when I hear this, in some ways, it almost sounds like your care taking Chrysler and it will just be allowed to sort of slowly dwindle down and perhaps become more irrelevant in the future. It sounds like that's something you're trying to avoid here by this sort of reinvestment aspect?
PRESS: That's absolutely true. It is just the opposite. What we're doing is we're facing reality. The reality is in the United States, the domestic manufacturers have about 48 percent of the market share and 75 percent of the dealers. The product portfolio we have, 32 different products, would cover a bigger market share and we can't afford it. And the result of that is that we can't focus our vehicles where we need to. We've got products that overlap to the same market and then they fail to offer great products in new markets that we're not even competing in. So it isn't about downsizing. It is about right-sizing, so we can be efficient and effective and customer focused.
YASTINE: We'll look forward to seeing the details of this plan as they emerge from your company. Jim Press, I appreciate you coming on the program.
PRESS: I thank you very much for your interest.
YASTINE: Our guest, Jim Press, chairman and vice president of Chrysler.
