Dodge: Will the Japanese Grab Life by the Horns?
June 27, 2007

By Peter Nunn

Japanese buyers love American muscle cars, Levis, Starbucks and Coke. But what about Dodge?

This month marks the start of a major new Chrysler product offensive to woo Japanese buyers and to introduce them to the Dodge brand, which, in the U.S., bills itself as bold, all-American and for people who grab life by the horns.

The product offensive comes at a time when Chrysler is being sold and the Japanese market in contracting. Japan has long viewed American cars as unsuitable for the country’s market conditions.

Dodge’s game plan

Small numbers of iconic Dodges, like the Viper sports car and Ram pick-up, can been seen from time to time being tooled around in Tokyo by enthusiasts.

But this is something different: a full, manufacturer-backed launch with new Dodges marketed through authorized Chrysler Group dealer outlets under the auspices of DaimlerChrysler Japan Ltd., which also handles Jeep.

Four Dodge models – the Caliber hatchback, Nitro SUV, Avenger sedan and Hemi-powered Charger SRT8  - are being shipped across the Pacific for this bold new mission.

To tie in with the new launch, the Chrysler/Jeep/Dodge designation on Chrysler’s 67 dealer outlets across Japan has replaced the Chrysler/Jeep name.

Realistic but upbeat

DaimlerChrysler Japan officials, meantime, are realistic, but upbeat. “The Japanese market, in which demand is falling and strong Japanese automakers exist, is tough. But we will appeal to those who want American-ish (cars),” said DaimlerChrysler Japan CEO and President Hans Tempel.

Dodge sold about 1.3 million vehicles worldwide in 2006. In Japan, Chrysler/Jeep sales came to about 6500 units, so there’s still plenty of room for growth.

However, when questioned on sales targets in Japan, Tempel said “he was not in a position to comment.”

On the face of it, the launch of Dodge in Japan looks an uphill challenge. The market is soft and American cars have a reputation for being largely unsuited for Japanese market conditions. The fact that Chrysler is being sold is another potential worry for demanding Japanese buyers who place a lot of emphasis on parts, service and quality.

A good value by Japanese standards

By local standards, the Dodges look like good values:

· the 2.0-liter Caliber is pitched at the equivalent of $21,429-$23,902 (taking an exchange rate of ¥123/$). In the U.S., the Caliber is Chrysler Group’s smallest, least expensive vehicle, starting at $13,850;

· the 3.7-liter Nitro is $26,805-$32,146. The Nitro, less than successful in the   U.S., starts at $19,350;

· the 2.7-liter V6 Avenger for Japan is $33,634. Largely sold to daily rental car companies and fleet customers, the Avenger with a V6 engine starts at $22,995 in the States;

· the muscle-bound Charger SRT8 with the 6.1-liter Hemi V8 is pegged at $52,929. It starts at $36,045 in the U.S..

While those prices are significantly higher than prices in the U.S., Japan-spec cars often come with full equipment specification and also need to conform to Japanese market conditions.

Japan: Part of a bigger global plan

In the big picture, the Dodge launch in Japan is all part of Chrysler’s plan to expand its international operations, to broaden its product portfolio outside the U.S. and increase sales and profits in the process.

Chrysler wants to double last year’s sales outside North America to reach 400,000 units in the next five years. From a nearly non-existent base, Chrysler sales overseas sales have achieved monthly sales gains for two years. Year to date sales outside of North America have groan 16 percent to 91,412 units so far this year over the same period of time in 2006. Last year’s overseas sales represented about 8 percent of Chrysler’s total sales.

To support its growth plan, Chrysler, between 2003 and 2007, is about doubling the number of products available outside North America, from nine to 20 vehicles. Within the number of models available, the company will triple the number of vehicles in right-hand-drive, from six to 18; and, quadruple the number of vehicles with an option for a diesel powertrain, from four to 16.

Chrysler went global with Dodge when it launched the Dodge Caliber. The next two Dodge vehicles making their way into global markets this summer are the Dodge Nitro and Avenger.

Chrysler also will add sales and service outlets. Outside North America, Chrysler has about 1,400 sales outlets. In established markets, like Western Europe, the company plans to add another 100 new sales outlets over the next two years. Another goal is to add dealerships in fast emerging markets such as Russia, India and, of course, China too.

Only last week, Chrysler hosted 70 potential investors at its Michigan headquarters for a sneak peek at Chrysler, Jeep and Dodge sales outlet ownership opportunities. Potential partners were from 19 countries, including Japan, Russia, and the Middle East. During the three-day forum with senior Chrysler executives, the investors learned about the different avenues the company is pursuing to become a more global operation. The Michigan event followed a similar one held in China where 142 dealers attended.

“While we will continue to aggressively defend our position in NAFTA, it is important that we expand in other markets so that we are not as dependent on the ups and downs of a single region,” said Chrysler CEO Tom LaSorda told them. “With a more global focus we will be better able to take advantage of emerging opportunities.”

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