Chrysler Is Back On The Ropes

I'm sure there are a few out there who remember years ago when
Chrysler was bailed out by the Federal Government. Well it sounds
like Chrysler may finally go down for the count this time unless some
divine power intervenes. I for one hope that power comes in the form
of their upcoming hemi-powered RWD sedans.
Chrysler crisis deepens
Shake-up, more job cuts loom as pressure grows on Zetsche to make
turnaround reality
By Bill Vlasic and Mark Truby / The Detroit News
Another new product is the Chrysler Crossfire. Chrysler plans to
increase global sales by 1 million units before the end of the decade.
Product blitz
Chrysler, trying to raise global sales of Chrysler, Dodge and Jeep
cars and trucks by 1 million units before the end of the decade, plans
nine new vehicle launches during 2004, including:
* Dodge Magnum rear-wheel drive wagon
Chrysler 300C rear-wheel drive sedan
* Redesigned Jeep Grand Cherokee SUV
Redesigned Dodge Dakota pickup
* Chrysler PT Cruiser convertible
Redesigned minivans w/fold-flat third-row seats
AUBURN HILLS -- The future of the troubled Chrysler Group will be on
the line Monday when CEO Dieter Zetsche presents his latest turnaround
strategy at a critical meeting of the DaimlerChrysler AG management
Sources close to the company say a major shake-up appears imminent in
Chrysler's sales and marketing operations and that white-collar
layoffs are a distinct possibility at the No. 3 U.S. automaker.
On Monday, Zetsche will lay out options to reverse Chrysler's slumping
sales, which are down 5 percent compared with last year, while
industrywide demand is off 2 percent.
Hailed as a hero after he took the reins of Chrysler three years ago,
Zetsche now faces the harsh reality of Chrysler's deteriorating
performance in a brutally competitive U.S. auto market.
"The whole market is saying it is a critical time for Chrysler," said
Rod Lache, auto analyst with Deutsche Bank AG, owner of 12 percent of
DaimlerChrysler's stock. "They have to prove they have a plan."
Chrysler spokesman Michael Aberlich confirmed that Zetsche will make a
presentation Monday in Frankfurt, Germany, to the management board of
DaimlerChrysler, formed in 1998 when German automaker Daimler-Benz AG
bought Chrysler Corp.
Aberlich declined to comment on Zetsche's agenda. However, he said
that Chrysler may have to revise its stated plan to limit future
white-collar job reductions to normal attrition.
"That is still our plan, but we really have to keep an eye on the
economy," he said.
In a related effort to cut costs, Chrysler is pushing hard to shed
high-wage unionized parts plants in its contract talks with the United
Auto Workers.
Speculation about sweeping cutbacks at Chrysler has been stirring
since the automaker posted a surprising $1.1 billion loss in the
second quarter.
In June, a report by Deutsche Bank analysts said "deep restructuring
scenarios look increasingly likely" and suggested that a spinoff of
Chrysler was possible.
Chrysler's sales have since bottomed out in an incentive-saturated
In August, Chrysler's U.S. market share slid to 11.7 percent -- its
lowest point in more than 15 years. And for the first time ever,
Chrysler slipped to fourth in monthly sales behind General Motors
Corp., Ford Motor Co. and Toyota Motor Co.p.
With sales falling and few new products coming soon to reverse the
trend, the pressure is on Zetsche to shore up Chrysler's bottom line
any way he can.
"The tom-toms are beating pretty loudly that a reorganization is
coming down," said Jim Sanfilippo, a marketing consultant with AMCI
Inc. in Detroit.
The concern over Chrysler has shaken investors in Germany, where
DaimlerChrysler has its headquarters.
"Most investors wish Daimler didn't own Chrysler," said Henning
Gebhardt, head of German equities at DWS, a Frankfurt-based stock-fund
manager. "No one can see how or when it (Chrysler) will improve."
Zetsche on the spot
It falls to Zetsche to address that issue before the 13-member
management board that governs DaimlerChrysler's global operations.
Zetsche and his top Chrysler deputy, Wolfgang Bernhard, are members of
the board.
The meeting, held in conjunction with the Frankfurt Auto Show, is an
annual strategic planning session conducted by the board each
It was at the same meeting three years ago that Zetsche's predecessor
at Chrysler, James Holden, made his last presentation to the board.
Holden was fired a month later by DaimlerChrysler Chairman Juergen
Schrempp amid mounting losses at Chrysler.
Zetsche, the former sales chief of Daimler's Mercedes-Benz luxury car
unit, was tapped to turn around Chrysler. He presided over a major
restructuring that closed six factories and cut 19,000 hourly jobs,
6,200 white-collar workers and 1,000 contract employees.
A tall, affable engineer with a drooping mustache, Zetsche earned
plaudits inside and outside of Chrysler for his low-key leadership
style and thoughtful manner.
Chrysler returned to profitability in 2002 and had projected a $2
billion profit this year. But that possibility evaporated with the
huge second-quarter loss.
Small profit predicted
The automaker has predicted it will earn a small operating profit for
the full year, but analysts are increasingly skeptical.
"I would be very surprised if they achieved a small profit as they've
forecast," said Juergen Pieper, an analyst with Metzler Bank in
Despite a plan to increase Chrysler's global sales by 1 million units
before the end of the decade with a host of new and redesigned models
-- nine vehicle launches are planned for 2004 -- an immediate dearth
of new products and a series of marketing missteps have dragged down
Chrysler's sales.
While the new Chrysler Pacifica sports wagon and Dodge Ram pickup have
been bright spots, Chrysler's aging minivan and SUV lineups have lost
share to Asian and European rivals.
Economic constraints caused the cancellation of a new Canadian factory
slated to build a new compact pickup called the Dodge M80.
Dealers on defensive
Chrysler's dealers have been on the defensive as Toyota and other
Japanese automakers have rolled out new models, and GM and Ford have
driven incentives and rebates sky-high.
"Chrysler dealer sentiment is at the lowest level since we began
tracking it in the early 1980s," said Art Spinella, president of CNW
Marketing Research Inc. in Bandon, Ore.
In June, sales and marketing chief James Schroer resigned and was
replaced by Joe Eberhardt, a veteran German sales executive with
Sources close to the company say a wholesale shake-up in the sales and
marketing staff could be announced as soon as Monday.
Beyond that, the question is how Zetsche will navigate Chrysler
through the latest storm. Company insiders concede that he is under
enormous pressure to end the year on a strong note.
While there are some promising cars and light trucks in the future
product pipeline -- a revamped Durango, new rear-wheel drive sedans
and wagons and a new Jeep Grand Cherokee SUV -- Chrysler is hardly in
a position to pin its hopes on vehicles down the road.
"It's three years since Dieter has taken charge, so we need to see
these products in our showrooms," said Dick Withnell, a Chrysler
dealer in Salem, Ore.
"Any CEO is under pressure if your market share is going down. This
business isn't for the faint-hearted."
Detroit News Staff Writer Christine Tierney contributed to this
report. You can reach Bill Vlasic at (313) 222-2152 or
'93 Cobra
'83 LTD
Reply to
Seriously. When will US carmakers figure it out? Folks like ME are sick of anemic, plasticy, expensive, jellybean-shaped FWD grocery-getters.
It's simple: I want something that weighs less than 3000 lbs, gets 25+ mpg, utilizes a classic rear-wheel drive configuration with a standard transmission, and a dirt-simple, reliable V-6 or better. How difficult is that?
I don't give a rip about Onstar, GPS equipment, an air-conditioned glovebox, seating for 10, a huge trunk, airbags, fancy-foofy headlamps (those old square glass jobs work just fine!), or even 'power-everything'. I'm perfectly happy with window cranks and other manual devices - put the R/D money into a decent, reliable drivetrain instead. Keep it priced less than $15,000, and design the damn thing to last at least 10 years. It ain't that tough!
_________________________________ JD's Locally-Famous Mustang Page:
Reply to
JD Adams
On Sun, 07 Sep 2003 23:58:05 -0000, Backyard Mechanic wrote something wonderfully witty:
Not a dime, they actually made money off the deal. Every penny paid back with interest. Early to boot. The Feds couldn't let an entire carmaker fail. The were also a major military provider.
Reply to
I guess you're getting old when carmakers stop catering to your eccentricities.
Cars are more about image than practicality anymore. It's no wonder to me why 18-yr. olds are $40K in debt right out of high-school nowadays. The kid across the street bought a new Malibu last year, right after she spent $13,000 to attend a vocational school, so that she can make $8.00/hr. as a medical assistant. She could care less about the debt or the fact that she doesn't have $5.00 to her name, BUT, according to her, she looks very cool doing it.
And she cannot fathom why I drive a beater 100 mi./day to and from work each day; a beater that I bought for $1200 and repaired myself to drive like brand new, that even gets 35 mpg. That sort of thing too, is in the vast minority, but still makes a LOT of sense to those who can think and reason.
_________________________________ JD's Locally-Famous Mustang Page:
Reply to
JD Adams
The 18 year old has been asaulted by pop culture, TV and her peers all her life that material items are the measure of a person's worth; being thrifty is just not cool. I know 40 year olds just like her - no retirement fund started, no savings, huge credit card debt, 2nd mortgage on their homes but a new car/SUV in the driveway, a fancy bassboat with a 150 HP motor, ATV's in the backyard; and one guy with a RV that he can't afford to buy gas for.
Because of my wife's illness, restoring my '67 convertible has taken the backseat, and I sold my airplane earlier this year, but at least my bills are paid up to date and I sleep soundly at night. I just have to wonder how the hell people with so much debt and no savings can sleep - an unexpected illness or accident, or short time of unemployment and they lose everything.
Reply to
Ralph Snart
Hell, an old Dodge Viper maintained by the owner costs less than 30k now. It's not what you drive, but how much you pay for it. And yeah, most people pay way too much for what they can afford. Every time I see a new Vette on the street, I wonder if the guy has more than $500 in the bank. If it helps him get chicks, though, then more power to him.
Reply to
I was just reading an article about incentives in the auto market, and it basily said that the Germans just don't "get it" and because they have been forced to play in that area they have lost thier arse. Acorrding to the article Chrysler has put a stop to one new plant and a couple of plant make overs for a new models (also put n hold) just because of money they "lost" due to give backs.
Reply to
Don't just blame MTV. Our own government can't live within its means, so its no better at setting an example.
Note: above comment was not intended to start a political flame fest. :)
Reply to
The problem is style is what gets people looking, and the gotta look before they buy. Also once most people become accustomed to having certain options they then become must haves. I just bought a 03 GMC Sonoma and I made the dealer do a trade to get me one with the power package (windows,locks,keyless). I did kick around the manual stuff since its a small truck reaching across to roll down the window wasn't a big deal, but I wanted the keyless for the convince, and so I wouldn't have to listen to the woman complain about how long it takes to let her in on those rainy days. :)
You are truely in the minorty on this one. People love toys. After the dealer did the swap to get my truck it sat on thier lot for a few days. The dealer had 4 people looking/wanting my truck with the power, while the three others with manual windows and locks have sat on their lot since May.
Reply to
It is usually the parents of the kids that has instilled the mentality of instant gratification. One thing I am greatful to my father for was teaching me the value of work. We got gifts twice a year, once at Christmas and again on your birthday. After that there was nothing. If one of us wanted something bad enough he would provide a means to get it through hard work. It's amazing what becomes "necessary" when you have to work for weeks or even a month to earn it. In my family there was no standing in line at the checkout whining for a new toy because it wasn't going to happen and it wasn't tolerated. We made many things to entertain ourselves and I never remember being bored when growing up. He taught all us kids the value of hard work and for that I am greatful.
The people who are in debt up to their eyeballs have nothing to loose. They never really owned the stuff they have anyway. I know couples who have filed for bankruptcy and within five years are ready to do it again. Someone gives them the credit to do it. It's why the interest rates on credit cards are so high. Wait until 10-20 years from now when these people go to retire. They'll find that the little bit of social security they receive won't even pay the monthly bills. Then they will blame the government and whine until some politician promises them more than the working class can bare. I feel sorry for the younger generation because these people won't care what burden they place on them. After all isn't it just what they're used to? Run up a tab they never intend to pay (i.e. a $5+ trillion deficit) and expect someone else to foot the bill (i.e. the working class).
Reply to
Michael Johnson, PE
It really doesn't make sense to buy a new car for $25k+. The value of most high-end cars drop as fast as a hookers pants looking at a $100 bill. Two to three years after a given model year there's a flood of those cars that hit the market from expiration of leases. They can be had for a huge discount over their price when new. For the same price, I would rather drive a three year old Lexus than a new Toyota Camry.
Reply to
Michael Johnson, PE
No doubt. I'd rather just use my key to open the wife's door first, instead of pushing buttons on a remote. Window cranks I can't reach just don't get opened. Hell, some minivans now actually have doors that automatically open.
I can go along with some of this stuff (self-cancelling turn signals and seats that move on a track are okay), but doors that open by themself? We're too lazy to open doors now?
I know...people love toys. I'd rather just pay a reasonable price for a car without all this fluff...something with a bulletproof drivetrain that doesn't look like a jellybean. Truly a minority opinion!
Reply to
JD Adams
Agreed. Along with the $10K+ in credit card debt I'm sure she's run up, she's probably in the 40's by now. She can't EVEN afford to have the oil changed, let alone the $600+/yr. to register it. Her parents pay for her insurance, repairs and fuel. She still lives at home, and with that kind of debt, she will never be able to move out on her own.
And I'm sure she will file for bankruptcy before she's even 21. Her parents aren't in much better shape.
I'm astounded at how badly people manage their finances these days. Just because you CAN borrow and spend someone else's money doesn't mean you should.
Anyway, I'm off on a tangent now, so I'll quit. Those of us who can read and figure won't buying any of Chrysler's overpriced jellybean FWD cars, and that's that. Bring on simple, affordable, RWD cars and we'll think about it.
Reply to
JD Adams
ZombyWoof opined in news:
Thank you very much! Amazing how that is often used by far left libs as an example of Corporate Welfare.
Just as we're hearing NOW about the costs of Iraq...
Libs would rather the Assassin came HERE and attacked us, because NOW they can claim that it's because GW stirred them up.
Never mind Albright nixed several attempts to get Bin Laden because the region was "sensitive". Clinton couldnt be bothered to reach out and take him because someone might cry "Imperialist"
Reply to
Backyard Mechanic
On Mon, 08 Sep 2003 02:39:31 -0600, Brad wrote something wonderfully witty:
Cars do not help you get chicks.
Reply to
Actually, a nice car can get a young guy chicks - but then the guy finds out that chicks that attracted to the car (and status) are generally not worth his time and effort.
Reply to
Ralph Snart
On Mon, 08 Sep 2003 15:34:27 -0000, Backyard Mechanic wrote something wonderfully witty:
Well if you liked my response try reading any of Ann Coulder's books. The titles are Slander & the recent one is Treason. She also has a rather interesting interview in a fairly recent issue of time.
Many people do not realize that patriotism and this countries welfare is not on the current liberal agenda. Nor in my mind will it every be. Hasn't been since WW II.
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