Some Good Ideas from Chrysler's Turnaround Plan
November 10, 2009

After a day-long session in which executives from Chrysler Group LLC and its managing partner Fiat S.p.A. made public the company's financial and product strategies that will carry it forward for the next five years, the overall impression is of a plan based on optimistic growth assumptions combined with dubious new-product directions.

But not all of Chrysler's five-year outline is unreasonable or illogical. Some aspects, if executed properly and promptly, can help Chrysler distinguish itself from the competition. The three best ideas to come from Chrysler's new business plan: a diesel engine for Jeep; a revamp of Chrysler's mid-size sedans; and a plan to pay back government loans.

1. A diesel engine for the Jeep Wrangler.

Chrysler and Fiat's product people have identified the Wrangler as the franchise for the vitally important Jeep brand. But they also know they have to keep the wick turned up, to keep this one-of-a-kind nameplate relevant. The fitment of a diesel this time next year for 2011 models is exactly what the Wrangler needs.

The perception of diesels fits perfectly with the Wrangler's storied attributes: tough and durable. The slow-revving diesel is perfect for the technical off-roading ability on which the Wrangler has made its bones.

But better still, the diesel is the enlightened way to craft a new environmental persona for the Wrangler, because it's always been known as a gas-sucker. A diesel finally will enable the Wrangler to get out of its own way while simultaneously throwing down at least a 25-percent leap over the deplorable 15 city/19 highway mileage rating for today's four-wheel-drive Wranglers.

While the other domestics and the Japanese automakers whine about the cost of the engine, the yo-yoing cost of the fuel, sunspot activity, the price of healthcare reform and anything else they can invoke to justify not taking the leap with diesel, Chrysler's Eurocentric Fiat management, first-hand witnesses to the absolute redemption diesel brought to Europe's car market - particularly for SUVs and crossovers - is simply saying, "What's the problem?"

2. A hasty but significant reengineering of Chrysler's midsize cars.

It's no secret the Chrysler Sebring and Dodge Avenger midsizers suck with a capital "S." This is not some contrived "perception" issue - these cars earned that reputation because they look, feel and drive, well, like crap.

Chrysler plans a wholesale makeover of the cars by late next year. New exterior. New interior. New V6. Everything goes but the platform, which simply cannot be fixed immediately.

Plenty of analysts and industry pundits have anointed this gambit a waste of money, that the horrific aura of these cars is a problem that speaks directly to the foundation engineering itself - a quantity no amount of cosmetic rejiggering or even a new engine can fix. Better to drop these cars now, it's been said, and wait for full-scale replacements based on a Fiat-derived structure, scheduled to arrive in 2013.

But maybe there's method to the madness. What if the reengineering of the current cars is a trail balloon for whether Chrysler stays at all in this segment? Accountants could pull out the stops and approve interiors massaged by Alfa Romeo's suppliers and it might not matter; perhaps the sheer badness of the current Sebring and Avenger has irreparably scorched the earth for Chrysler in the midsize-car market, and the world already has forever made up its mind it needs Chrysler midsize cars like it needs another brand of MP3 player.

If buyers continue to renounce the Chrysler- and Dodge-branded midsizers even after the "major modification" coming next year, that could be management's signal to shut down development of a next generation and devote scarce resources to greener (and less competitive) pastures.

Maybe the future, smaller Chrysler just won't be a company that makes midsize cars anymore. Maybe that's okay.

3. Pay back the government.

Chrysler said it plans to be cruising along well enough by 2014 to pay back the $5.7 billion it owes the U.S. Department of Treasury. Whether the company will be in a position to actually go through with the pledge is dubious - but doesn't change the fact it's a great talking point. One you'll probably hear about often.

The United Auto Workers union probably would prefer to see Chrysler talking big about hacking away at the $4.6 billion obligation Chrysler has with the union's Voluntary Employee Benefit Association retiree health-care trust (the plan allots the union just $100 million over the next five years).

But Chrysler leaders have seen the poll results and the sales numbers, seen how Ford Motor Co. has benefited from being the only one of the Detroit Three automakers not to have declared bankruptcy and not to have needed a government bailout.

Americans don't like other Americans being on the dole and Americans sure don't seem to like car companies (and mega banks, come to think of it) being on the dole, either. It may never happen, but Chrysler is wise to designate a payoff date for its note with the taxpayers. - Bill Visnic, Senior Contributing Editor

Photos courtesy Chrysler Group LLC

1 - A diesel engine for the Jeep Wrangler is an inspired product move that can't happen fast enough.

2 - Chrysler's presence in the midsize market may be a lost cause; the success of next year's heavy makeover of the Sebring and Avenger (shown here) could be the crucible.

Posted by Michelle Krebs at 3:54 AM under Chrysler , Commentary , Featured , Technology | Comments (2) | digg this | Seed Newsvine

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