FIAT Outlines New Survival Strategies for Chrysler
Wednesday, November 04, 2009SUSIE GHARIB: A pep talk and survival plan from Chrysler today. The struggling auto maker's new boss, Sergio Marchionne of Fiat, spelled out a new five-year business plan to rev up Chrysler which emerged from bankruptcy five months ago. Marchionne kicked things off with some good news. Chrysler is sitting on $6 billion of cash. He also said Chrysler will break even next year, doubling sales by the year 2014 and increase its market share from 9 to 13 percent over the next five years. Marchionne's remarks were part of a marathon briefing session with analysts and journalists at Chrysler's headquarters. Our Diane Eastabrook was there and is standing by in Auburn Hills, Michigan with more. Hi Diane.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Hi, Susie. Believe it or not this meeting has been going phone for seven hours and it's still going on. A couple of highlights to talk about. Everybody is wondering about products. There are a few things that are going away, the Chrysler PT Cruiser, the Dodge Viper, the Dodge Caliber. At the end of next year, we'll be seeing the Fiat 500, which is a sub compact kind of like the Mini Coopers. That will be coming to market here in the U.S. And then in 2012 and 2013, we'll see a handful of small cars, sedans, some sport utilities that are built on the Fiat platform, coming to market here in the U.S. Joining me now to talk more about the five-year plan at Chrysler is Rebecca Lindland from IHS Global Insight. Not a lot coming to market new over the next couple years. Is that a good thing for Chrysler?
REBECCA LINDLAND, AUTO ANALYST. IHS GLOBAL INSIGHT: It's definitely a big concern that we have. When we looked at all the information we've gotten today, a lot of it is really good. We really feel like they've been able to exploit some synergies with this partnership with Fiat. They've been able to leverage it. But I would say that probably the weakest point of today has been the products and the details of what is coming to the market.
EASTABROOK: They're talking about breaking even in 2011. Is that overly optimistic given the kind of economy we're in right now and the way we've been seeing consumers shopping?
LINDLAND: Their targets are impressively aggressive and more power to them if they can make this work. But I think that we are still dealing with a market that is very conservative. You know, consumers still aren't feeling really great about going out shopping. They are still worried about losing their jobs. And as long as we're in that environment, to grow and gain market share at the pace that Chrysler laid out today is going to be a tremendous challenge.
EASTABROOK: One of the things I noticed that sounded like they're very high on Jeep, not so much on Dodge. Are we going to see Dodge go away?
LINDLAND: I don't think you'll see Dodge go away. Actually their strategy that they present today is to separate Dodge cars from Ram. So now they have another brand, a fourth brand and they are really marketing the pickup trucks, specifically under the Ram brand. So it's a very interesting strategy. I'm not completely sold on it yet. We'll have to get more details about that.
EASTABROOK: They also talked about doubling truck sales at a time when it seems like people are pulling away from trucks. How are they going to do that?
LINDLAND: They're expanding. They're going into more commercial, more heavy duty. They're looking at hauling (ph) in (ph) diesels, which is a great application for trucks, so they are looking at again using some synergies with Fiat, who is popular in heavy duty trucks.
EASTABROOK: They also talked about being able to pay back all of the TARP money by 2014. Is that going to be doable?
LINDLAND: Very aggressive, very aggressive. All the moons need to align for that to happen. And right now again we're just concerned about getting the market back on track. So their goals are incredibly aggressive and hopefully they can do it.
EASTABROOK: You and I were talking earlier. You wanted to see some kind of product, something that you could touch. Is that going to be tough for them to sell?
LINDLAND: You know, we've been seeing these wrapped up cars for a while now, these little drawings, little pictures of wrapped up cars. In fairness, they've only been married for five months. It's tough to produce a legitimate child in five months. So I understand that, but it would have been really great to see even a computer generated drawing, something beyond what we saw, definitely the weakest part of the presentation today.
EASTABROOK: Is there enthusiasm though? That's one of the things I was hearing from some of the executives, that there's renewed enthusiasm at Chrysler.
LINDLAND: I will say I really appreciated the passion that we saw demonstrated, both from people that have been at Chrysler for a long time and from the Italians. One thing that we loved today was the emphasis on the Chrysler building. It is gorgeous art deco, incredibly elegant iconic building, we had sort of forgotten about. And I love the idea that that really was emphasized today.
EASTABROOK: Thank you very much, Rebecca. Chrysler will be rolling this out to all its dealers next week. Susie.
GHARIB: It's an ambitious agenda, as you said, thanks a lot Diane. That's our Midwest bureau chief Diane Eastabrook reporting from Chrysler headquarters.
