DETROIT — Chrysler brand CEO Olivier Francois startled an audience of more than 400 journalists and analysts last week by showing video footage of a couple passionately making out in the back seat of a Chrysler 300.
A voice says: “Let’s design cars people want to make out in again, cars people want their pictures taken in.” The clip shows such fashion icons as Coco Chanel and Giorgio Armani and lays out a bold new vision for the Chrysler brand.
The voice says: “What ever happened to style? It wasn’t too long ago America had it. At Chrysler, we believe it’s time to get it back, to regain the style.”
Last week Francois was one in a parade of Chrysler Group brand bosses seeking to reclaim lost glory with daring plans. Group CEO Sergio Marchionne is betting Francois and his peers at Dodge, Jeep and Ram truck will redefine their brands for new customers with the help of fuel-efficient, Fiat-based vehicles.
The challenge is daunting. In recent years, General Motors gave Saturn highly regarded vehicles based on European Opels. The brand failed anyway.
On the other hand, the Mercedes-influenced Chrysler 300 was the biggest hit of the decade-long DaimlerChrysler alliance.
Observers were impressed by the plan unveiled by Marchionne and his team to reinvent its old brands for a new generation of customers.
Chrysler will spend up to $23 billion on new products, manufacturing and brand building over five years, hoping to push market share from its current 9 percent to more than 13 percent. Planned are about a dozen new vehicles underpinned by Fiat platforms and technology.
Chrysler’s Fiat-influenced products Twelve Chrysler Group nameplates will be based on Fiat platforms or be rebadged versions of Fiat Group vehicles. Here are the models and the year for U.S. sales.DodgeRamChryslerJeep2012, compact sedan, Fiat platform2012, small fwd van, rebadged Fiat2012, compact sedan, Fiat platform2013, subcompact SUV, Fiat platform2013, subcompact car, rebadged Fiat2012, full-sized van, N. America assembly 2013, compact crossover, Fiat platform2013, Avenger redesign, Fiat platform 2013, subcompact car, rebadged Fiat2013, Liberty redesign, Fiat platform 2013, Sebring redesign, Fiat platform 2013, mid-sized crossover, Fiat platform
Meeting goals will be crucial
Marchionne, who also is CEO of Fiat S.p.A., cautioned that the figure could shrink if Chrysler fails to meet its interim sales goals.
“If we cannot meet that objective, then we will not spend the money,” he said. “It’s that simple.”
Wrote Adam Jonas, an analyst for Morgan Stanley in London: “We were surprised by the flood of aggressive investment” in product, r and marketing. Chrysler is really going for it.”
Going for it is one thing. Getting there is another.
The Jeep brand is the most famous brand in the Chrysler Group stable. Brand CEO Michael Manley pointed out last week that many schoolchildren are taught to say the letter “J” by pronouncing the word Jeep.
Jeep’s core vehicle is the Wrangler. A redesigned Grand Cherokee SUV arrives in May. In 2013, three Fiat-based crossovers are scheduled to arrive — including a small Jeep based on the Fiat Panda, sure to test the limits of the Jeep brand.
John Wolkonowicz, an analyst for IHS Global Insight, says Jeep faces a challenge as consumer tastes shift from traditional SUVs to crossovers. Jeep has had a hit-and-miss record in adapting to this market shift. Many Jeep enthusiasts don’t think the Compass crossover is a true Jeep because it lacks Jeep’s trail rating and because the base model was offered in front-drive only.
“When you start to water the brand down with nontrail-rated Jeeps, I think you run the risk of destroying the brand,” says Wolkonowicz.
The Compass and its sibling, the Patriot, have been criticized for their poor quality and have been slow sellers.
With the Ram truck now sold under a separate brand, Dodge must reshape itself as a broad-based car brand geared to youthful lifestyles — while keeping an eye on its traditional strength as a performance brand.
“Dodge was overshadowed by the Ram brand,” said Ralph Gilles, Dodge brand CEO. Gilles wants to add more refinement to the Dodge equation and expand the brand beyond its traditional masculine base.
Can Ram stand alone?
Mike Levine, editor of the pickuptrucks.com Web site, wrote a column listing five reasons why he thinks it was a mistake to separate Ram from Dodge.
“Dodge pickup owners say they drive a Dodge Ram,” he said. “Divorcing Ram from Dodge could end up angering many of Chrysler’s most loyal customers. What’s the benefit of that?”
Of all Chrysler Group brands, the flagship Chrysler brand has the furthest to go. The tired lineup encompasses only the Town & Country minivan, the aging PT Cruiser, the 300 and the much-criticized Sebring sedan.
Francois and his team have their work cut for them out if they are to transform Chrysler into a high-fashion, upscale brand.
Francois wants to boost annual U.S. sales from below 200,000 in 2009 to about 500,000 by 2014.
Chrysler will be closely linked to Fiat’s Lancia brand and will get more Fiat-based vehicles than any other brand. Those include a compact sedan in 2012 and a small car, mid-sized sedan and mid-sized crossover, scheduled to arrive in 2013.
Global Insight’s Wolkonowicz was a skeptic before hearing the presentation last week. Now he’s more hopeful but still has doubts.
“Their whole plan moving forward is predicated on the idea they’re going to achieve 14 percent market share by 2014,” he says. “We’re showing them with a 7 percent market share for that period. After hearing the presentation, we’re not moving our forecasts.
Marchionne knows the road ahead is difficult.
“Yesterday we were given another somber reminder of where we are in the food chain,” he said last week, referring to Chrysler’s steep 30 percent sales decline in October.
“No one is planning miracles here. We’re simply committing to the execution of a few strong and precise choices that will trigger rapid change.”