Chrysler SRT Spared From the Cost-Cutting Knife

Chrysler SRT Spared From the Cost-Cutting Knife

By Bill Visnic

Last week, Chrysler LLC announced cuts in production, people and products, but the automaker’s in-house SRT performance division appears largely unscathed.

Chrysler “lifer,” Michael Accavitti, who is director of the Dodge Brand and SRT marketing communications, is confident about the future of the performance division. He believes Bob Nardelli, Chrysler’s chairman and CEO with no auto industry experience, is a fine choice to lead Chrysler in its new life following its split with former owner Daimler AG.

And SRT got a vote of confidence from Jim Press, the Toyota executive brought to Chrysler to run sales, marketing and product planning. “SRT is giving those customers what they want in emotion, in passion, in driving,” he said recently, though he hinted the SRT label would focus on Dodge products.

Accavitti has every “car guy’s” dream job: he’s the front man for an automaker’s in-house performance-tuning division, in this case, Chrysler’s Street and Racing Technology, or SRT.

The “car guys” famously have little regard for the bean-counter types. Not only is the business background of Chrysler’s new CEO Bob Nardelli hugely more financially oriented than product-focused, Nardelli comes with double whammy of enjoying zero auto-industry experience, period.

But Accavitti is convinced new chairman and CEO Nardelli is the real deal. AutoObserver spoke with Accavitti soon after Chrysler announced Nardelli’s arrival. Accavitti spoke about Nardelli’s passion, SRT’s direction in the post-Daimler era, and how he expects SRT will fare under new private ownership.

You run the company’s SRT marketing operations, but what’s your background? Aren’t you an engineer?

I've worked over the 30 years (of his Chrysler career) in most of the pillars of our organization: engineering, manufacturing, finance, sales and marketing. So I can speak to quite a few areas of our company.

I have an undergraduate degree in engineering, I have a masters in business, and I have a law degree.

OK, let’s just get down to it: New owner Cerberus names Bob Nardelli as Chrysler LLC’s new CEO. Nardelli ran Home Depot, for heaven’s sake -– how do you think SRT is going to fare with the new management? Will SRT’s “appearance” to consumers change?

I have not received any indication that (SRT’s image to consumers) would change.

SRT is our ultimate performance line. It's the lineup that attracts the most passionate auto enthusiasts. It's just good business to be on those guys and gals consideration lists and to have those guys talking about you. I don’t see any change at all in the direction we’re going with SRT.

With so much ground to cover immediately following the breakaway from Daimler, is the SRT part of the business on the radar screen? Does Cerberus -– and equally important, Bob Nardelli –- get it? Do they understand what an in-house tuner is all about?

Absolutely.

My indications are -– and we had a management meeting with Bob (immediately after Nardelli was hired) and got to know him a little bit better -- even though he's coming from outside the auto industry, this guy understands cars, he understands that these are emotional purchases and passionate purchases. It's going to be great -– everything is going to be fine with Bob Nardelli driving this bus, I’ll tell you that right now.

You’re convinced he does understand the emotion of the car business, that his lack of auto-industry experience can be overcome?

He's a NASCAR fan, a car racing fan himself. Bob’s a passionate car guy, he's got a Plymouth Prowler that he drives for fun. He's a car guy, right? Whether he has the 30 years experience in the automobile business or not, he's a good business man.

He's got a proven track record. He's going to allow us to do the things we need to do to sell cars –- and maintaining that SRT lineup, enhancing it, is one of those things.

Will much be lost in the breakup with Daimler? Was there much synergy with SRT and Daimler?

Not really, from an SRT perspective. There were core business and core engineering developments that were worked on jointly. But From an SRT perspective, the work is really done here in Auburn Hills (Michigan, Chrysler’s headquarters) at our SRT engineering group. The separation from Daimler is not going to really impact that end of the business at all.

What about advertising? I don't see much about SRT other than print. What are your budgets like? What is your aim?

We rely on print, events and Internet. Those are our primary media for SRT products.

It's not so much budget driven. These are niche vehicles, so we use niche advertising approaches.

Generally people don't think of the Internet as being "niche," but because of the platforms that are available it can be very, very specifically niche.

We can behavioral target -- meaning we look at, through cookies -- what people are looking at (as they browse the Internet) and looking for and understand their interests. We can serve them up an ad that suits their lifestyle.

We do use print because the people who buy our cars are car enthusiasts and they're passionate about other things, like cigars or yachting or things of that nature. We can serve them up advertising in publications that they read.

It's a much more effective, targeted communication than a broad TV show. We have in the past used some TV. But the general premise is we want to be more targeted than that.

It seems marketers these days almost feel the need to apologize for print advertising…

It fell out of favor, and I don't understand why. Obviously we research the heck out of all our customers bases, and one of the things we measure is, does this particulate demographic overindex on print?

If the answer is, yes they do, we get it by category and we can understand the readership of the target that we're going after. Print's a great way to get your message out there to a very narrow target.

Our SRT vehicles are halo vehicles for all of our brands. We will use them in mainstream commercials.

It won't be a big SRT commercial with "SRT" flashed across the screen. We have used the Grand Cherokee SRT8 in a Grand Cherokee commercial (and other SRT models). For some, we might use it in a montage just to show how beautiful the car looks -– we do leverage the SRT where we can.

What you'll find on most of our ’08 brochures: The cover girl is the SRT model because we feel that they are the most attractive vehicles that we have. It's the image model.

Are there any regions that are particularly strong for SRT sales?

Yeah, sure. What we find is the Sunbelt, the “smile” states. California does very well, Texas, the Southwest, Arizona. They overindex to SRT sales. Where we underindex is where we normally see trucks overindex.

Are dealers happy with their SRT business? Yeah, I think so.

Like with a lot of our niche stuff, you find some dealers that are super-passionate about it. They leverage the heck out of it. Then you get the guys, who, for whatever reason, where they live or their customer base, they're just not into the SRT vehicles and they may not stock as many of them.

But for the most part, the dealers I've talked to are very satisfied with the SRT models and the (production) formula we use. We keep them in small quantities so they're not in distress (low demand). So for the most part, dealers that I've talked to have been very satisfied with where we're going with this program.

What about the recent inventory difficulties at Chrysler? What were SRT inventories like during that time?

It depended on the model. We did have a couple models that got up over a days' supply target that we really wanted. It wasn't a significant piece at all of the mounting inventories –- we kind of left away from that.

The way SRT volumes have worked, we base [production] on a flat number. It's not like saying we get 5 percent of whatever you build. So we really didn't get ourselves into too big of a jam.

In all honesty, we did have a model or two that got a little north of what we wanted. With SRTs, we do want to "pull" demand. We're trying to strike that balance and operate in that fashion.

We watch [SRT inventories] on a monthly basis. One good thing about having "host vehicles, we can mix-manage. We’ve gotten our inventories to a level we're very comfortable with in all our products -- including the non-SRT units.

The dealers are feeling quite a bit of relief over the stock situation that we had in the last year. We've taken out a significant amount of [total] inventory through production cuts.

Is there an optimum number of SRT models? Would you like to see an SRT version of everything Chrysler does?

No, I don’t think that makes a lot of sense. SRT’s gotta stand for something, it’s gotta mean something.

What we have to do is satisfy the five “pillars” (that managers say each SRT vehicle must have: excellent ride and handling; benchmark braking; a standout powertrain and a race-inspired interior and exterior). If we can’t satisfy those pillars, I don’t want an SRT version of something.

We don’t want this to just become a badge we hang on every single car. I’m very protective of that as the brand manager.

Photos from Chrysler

1 - 2008 Dodge Magnum SRT8 will be discontinued next year.

2 - Mike Accavitti, director, Dodge Brand and SRT

3 - 2008 Dodge Caliber SRT4

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.