This story explains the event at Cobo on Monday as in this quote:
"After this week's dealer tour, Zetsche will carry his product message to the media at a press event scheduled in Detroit's Cobo Center on Monday, Nov. 17. Zetsche is publicly showing off the company's nine upcoming vehicles, unusual in an industry that guards future product information."
Link to story:
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(08:30 Nov. 12, 2003) CEO Zetsche hits the road to pitch Chrysler's new wave of products By MARY CONNELLY | Automotive News
Like a presidential candidate, Dieter Zetsche started barnstorming the United States on Monday, Nov. 10. Over the next six days, Chrysler group's CEO will visit eight sales regions to rally dealers behind an upcoming wave of new products. Zetsche must fire up dealers because the Chrysler group's three-year turnaround plan ends next month and the company is still faltering. The factors that Zetsche could control
- costs - fell into place. But he could not control vehicle prices in a U.S. price war, and revenues fell short. Zetsche is betting that he can still make the plan work, with help from some new iron. By the end of next year, nine new or updated products will be on sale in Chrysler, Dodge and Jeep showrooms.
But the fresh products are far from guaranteed hits, because Zetsche is moving all three Chrysler group brands into new territory. He is betting that U.S. consumers will embrace premium vehicles from the Chrysler brand and large rear-wheel-drive models from Dodge and Chrysler. At stake is the Chrysler group's future - and his own. If he stumbles, Zetsche has little chance of replacing Juergen Schrempp when DaimlerChrysler's chief executive retires.
"In the last three years, we had a relatively thin stream of new products," Zetsche said last week. "This is now changing dramatically. In the next year, we will be able to attack our competitors. A year from now, we definitely will be seeing a move upward."
If the turnaround plan were only about cutting costs, Zetsche would be in great shape. The company has exceeded the cost-cutting targets established in February 2001, three months after Zetsche landed in Detroit. (Caption: Sales of the Chrysler Crossfire, part of DaimlerChrysler's plan to take the brand upscale, have been tepid so far.) Over the last three years, he has delivered $7 billion in cost savings
- $1 billion more than the cost-cutting plan called for. Most of the savings were achieved by extracting price cuts from suppliers. Zetsche also cut 30,000 jobs in the United States, Canada and Mexico.
The cost-cutting strategy is evident in redesigned products such as the 2004 Dodge Durango. Tom LaSorda, Chrysler group executive vice president of manufacturing, says the 2004 Durango requires 10 percent fewer worker hours to build than the 28.5 hours needed to build its predecessor. Such manufacturing efficiency is mandated for all future vehicle programs, LaSorda says.
But while the company has cut costs, it has not increased revenues. The U.S. price war, sparked by General Motors after the Sept. 11,
2001, terrorist attacks, has forced the Chrysler group to offer hefty rebates. Chrysler's sales and market share have fallen. In 2001, the Chrysler group planned to boost revenues by $2.1 billion by the end of 2003. The company will fall short, but it will not say by how much.THE NEW IRON
The Chrysler group says fresh products will jump-start its turnaround plan. These nine products will arrive in showrooms by the end of 2004:
2005 Chrysler PT Cruiser convertible: Chrysler expects to sell as many as 20,000 annually. The convertible will be offered with a standard 2.4-liter four-cylinder turbocharged engine generating 180 hp. A 220-hp version will be optional.2005 Dodge Magnum wagon: This performance-oriented wagon rides on the new rear-wheel-drive LX chassis. About 80 percent of the Magnums sold will have either a 2.7-liter or a 3.-5-liter V-6 engine. The Magnum's optional engine is a 340-hp, 5.7-liter Hemi V-8 producing 365 pounds-feet of torque. The Magnum is a high-volume unit replacing the Dodge Intrepid, a model that sold 111,356 units in 2002.
2005 Chrysler 300 sedan: Chrysler's new model shares its chassis and three engines with the Magnum. Electronic stability control, antilock brakes and the 5.7-liter Hemi V-8 will be standard on the 300C, the top-of-the-line model. The equipment will be optional on the base model, called the 300. The 300 Touring and 300 Limited round out the lineup. The sedan replaces the Chrysler Concorde and 300M, models that sold 63,986 units in 2002.Redesigned 2005 Dodge Dakota: The pickup remains mid-sized. Electrical architecture arrives from Mercedes-Benz.
Redesigned 2005 Jeep Grand Cherokee: The automaker's most popular SUV will share some components with Mercedes-Benz vehicles for the first time. A third row of seats is expected.
Redesigned 2005 Dodge and Chrysler minivans: The third-row seat in the minivans will fold flat, matching a feature already offered by competitors. Interior upgrades and some exterior freshening are expected.
2004 Dodge Ram SRT-10: A Viper-powered Ram pickup that will arrive in showrooms in January.2005 Chrysler Crossfire convertible: The convertible shares components with the Mercedes-Benz SLK. It will be assembled by Wilhelm Karmann GmbH in Osnabruck, Germany.
2005 Jeep Wrangler Unlimited: This stretched version of the Wrangler goes to dealerships next year.Through nine months of this year, the company posted revenues of $43.1 billion, down 20.7 percent from the same period a year earlier.
The Jeep Grand Cherokee tells the story. Revenue generated by the Grand Cherokee dropped 37 percent to $3.9 billion in the first nine months of 2003, compared with the same period in 2000, according to an Automotive News analysis. In the first nine months of 2000, the average Grand Cherokee transaction price, including incentives, was $29,483. That dropped to $27,276 in the same period of 2003. The figures were provided by the Power Information Network.
The Dodge Ram pickup has been one of the few bright spots. It has generated $9.1 billion in revenue in the first nine months of 2003, up
26 percent compared with the same period of 2000.The revenue figures do not reflect the precise amount of revenue flowing to the Chrysler group. That's because the calculations are based on transaction prices that include dealer gross profit.
After this week's dealer tour, Zetsche will carry his product message to the media at a press event scheduled in Detroit's Cobo Center on Monday, Nov. 17. Zetsche is publicly showing off the company's nine upcoming vehicles, unusual in an industry that guards future product information. The road show is meant to allay skepticism on Wall Street about the Chrysler group's recovery. But critical risks threaten Zetsche's product gambles. Zetsche wants to:
Expand Jeep beyond its historic roots. But by producing a new generation of less-capable Jeeps, he risks diluting the brand and turning off buyers who pay for Jeep's pure SUV image.
Convert Americans to large rear-wheel-drive vehicles. The 2005 Dodge Magnum and Chrysler 300C will be the first high-volume models fully developed since Chrysler Corp. was acquired by Daimler-Benz AG in
1998. It's not clear that family shoppers, particularly in the Snow Belt, will embrace rear-wheel drive.Push Chrysler's products upscale. That's a daunting task during a price war. And Chrysler's current owners are mainstream buyers. Sales of the Chrysler Pacifica, with a base price of $31,230, including freight, started slowly last spring. The Pacifica now carries a $3,000 rebate. The $34,495 Chrysler Crossfire also is off to a tepid start.
Zetsche is confident he can fight back now with more than just cost cutting. "In the first three years of the turnaround, we were successful in moving our cost base to a more healthy area, improving our quality and playing defense," Zetsche says. "But we missed our assumptions for volume, share and margins per vehicle."
The introduction of a redesigned Dodge Durango this month and nine products in 2004 will put the company on the offense, he says. And when minor freshenings and facelifts are counted, more than half of Chrysler's volume will be renewed on an annualized basis, Zetsche notes. Zetsche says he has hit on a winning product formula.
Jeep 4x4 models will remain rugged SUV standard bearers, he says. "Around this core - which we will defend - we can do something more," Zetsche says. "The Jeep brand has more potential than is being leveraged today." Jeep models developed to compete with softer-riding sport wagons will be required to be "superior over their direct competitors," he says.
The decision to move to rear-wheel drive is sound, Zetsche says. "For large cars, we know on a factual basis that rear-wheel drive is clearly superior over front-wheel drive," he says. "The American industry tried to convince the customer of something else because the components for large front-wheel-drive vehicles were readily available from smaller cars." Electronic stability control and traction control have tamed the bad habits of rear-wheel drive, Zetsche says. "Where the customer is still concerned, we will offer at Dodge and Chrysler all-wheel-drive to address those concerns."
Reworking the Chrysler brand image is a longer-term strategy, Zetsche says, adding that Chrysler will remain a volume brand. But over time, Chrysler will field more vehicles that have a "premium advantage," further distancing the brand from Dodge, he says. It's a no-win game to sell 'commodity' products distinguished only by their big discounts, Zetsche says. "You have to differentiate yourself in the product. We want more and more customers coming to us because they are excited about our product, not just because we announced an incentive."
While burdened with what Zetsche calls a "slow launch," the Chrysler Pacifica has built sales volume and "today is very successful for us."
Aided by the $3,000 rebate and lower-content models, Chrysler sold
7,703 Pacificas in October, compared to 6,642 in June. Pacifica sales have increased for seven consecutive months, Zetsche said. The pressure on Zetsche, COO Wolfgang Bernhard and new marketing boss Joe Eberhardt is intense.In October, lackluster U.S. performance forced DaimlerChrysler to report lower-than-expected earnings. Standard & Poor's gave DaimlerChrysler a negative outlook and downgraded its long-term credit rating one notch to BBB.
Manfred Gentz, DaimlerChrysler's CFO, cautioned that the U.S. operation may fall short of its goal to post a slight operating profit in 2003. Until April, the company had projected a $2 billion annual operating profit. The sour numbers show why Zetsche wants to rally the dealers. Chrysler's future - and his - depends on it