Chrysler Plan Kills Models; Consolidates and Reduces Dealerships
February 08, 2008

By Michelle Krebs

Chrysler has launched what it calls Project Genesis, a plan to reduce the  number of models it sells and consolidate Chrysler-Dodge-Jeep franchises under a single dealership roof.

Chrysler’s announcement comes on the eve of the National Automobile Dealers Association convention, wich kicks off this weekend in San Francisco. In the company’s statement released in the wee hours of Friday morning on its Firehouse Web site, Chrysler Vice Chairman and President Jim Press said he and his team will discuss the plan with dealers at the convention.

Asked later in the day on Friday, after a speech in San Francisco to the J.D. Power and Associates Automotive Roundtable, Press said Chrysler had no targets for the number of dealers and number of vehicles planned for the future.

"The media numbers are all hypothetical and none of them are actual, and they're all guesses," Press said.  "We don't know how many models we're going to have. Nobody knows that."

Before the dealer convention, Press and company just completed an eight-city "New Day" (Chrysler's new advertising theme) road show, during which they met with approximately 3,000 dealers to discuss the company’s 2008 strategy for boosting dealer profitability and building the value of Chrysler franchises. Chrysler has 3,600 dealers.

The statement posted on Chrysler's Web site read like gobblygook: “As Project Genesis evolves, the company will work with its dealers on a menu of options to create customer-driven alternatives that align the dealer network with the product portfolio.”

Translation: Cut models, thus cutting jobs and closing factories; and reduce dealer ranks, getting rid of unprofitable ones.

Killing Models, But What Ones?

Chrysler’s plan to kill more models comes as no surprise. The automaker’s executives have been hinting about it for months.

Last fall Chrysler announced it would eliminate from its product portfolio the Chrysler Pacifica, Crossfire and PT Cruiser convertible as well as the Dodge Magnum.

Now endangered are slow-sellers and badge-engineered models that don’t fit a brand’s image.

At his first media roundtable as a Chrysler executive back in November, Press said Chrysler’s three brands would chart their own paths, and models would not overlap. Like his predecessors at Chrysler, Press has a vision for Chrysler to be the smaller, upscale brand, Jeep the rugged, off-road brand and Dodge the volume seller.

Press hinted, for instance, that Jeep should return to its Trail-Rated image, and that car-based Jeeps such as the Compass and Patriot are inappropriate for the brand.

Indeed, a conspicuous overlap of models is the Dodge Caliber, Jeep Compass and Jeep Patriot, built at Chrysler’s Belvidere, Ill., plant. Chrysler recently cut the number of shifts at the plant from three to two. These relatively new models have aged quickly in the market, and Chrysler reportedly is resolving at least one of the problems with the vehicles -- cheap interiors -- with a quick makeover.

Slow Sellers at Risk

Speculation has been that other slow-sellers are at risk as well, including the boxy Jeep Commander and the large SUV twins, Chrysler Aspen and Dodge Durango. The Aspen and Durango currently are planned as first to offer the 2-Mode hybrid powertrain developed by Chrysler/Daimler with General Motors and BMW. However, that introduction has been pushed from the first to last quarter of 2008.

Another big question is what will Chrysler do with its newly redesigned minivans? Chrysler created and has owned the minivan market. In fact, minivans have been Chrysler’s bread and butter. But sales of its newly redesigned models are dreadful. According to Edmunds.com’s analysis, Chrysler Town & Country sales were down 20 percent in January compared with a year ago -- the last year of the current model. Worse, Dodge Grand Caravan -- the volume model -- plummeted 56 percent. Neither minivan sold even 10,000 units.

In the interim, as Chrysler mulls what to do with the various models, it has launched a number of value packages on some of its models. Features wrapped in a package with a lower price include certain versions of the Chrysler Aspen, Town & Country and Dodge Caliber.

January: Sales Slide Continues

Chrysler announced its January sales in the U.S. were down 12 percent from January 2007. Chrysler sales may well be down double-digits every month as the automaker follows the lead of General Motors and Ford in reducing its sales to daily-rental fleets. In January, Chrysler said it decreased daily-rental sales by 18 percent.

Still, a few bright spots existed in Chrysler's January sales report. Chrysler Sebring sales continued their upward trend of recent months, with sales up 33 percent in January. Jeep Liberty sales climbed 17 percent. All Dodge cars -- Caliber, Avenger, Charger and Viper -- posted increases.

On the truck side the Dodge Ram, in its last year in its current form, had a sales drop of 18 percent. Similarly, Dakota sales nosedived 46 percent, even though competitors Ford Ranger and Chevrolet Colorado had good months.

As for SUVs, Durango sales fell 33 percent and Jeep Grand Cherokee sales were off 19 percent.

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