New Jeep "must be flawless"

[rickaren]

Chrysler's Marchionne Says Automaker's Cash Is Reviving Models


March 30

Chrysler Group LLC, the automaker run by Fiat SpA, is using its $5 billion in cash to overhaul its vehicle lineup starting with a new Jeep to be introduced in June, Chief Executive Officer Sergio Marchionne said.

"I'm producing cash that I keep reinvesting in the product portfolio," he said today in New York at a conference sponsored by the National Automobile Dealers Association and research firm IHS Global Insight. "I feel a lot more comfortable today than I did 12 months ago, by far."

Chrysler has been operated by Turin, Italy-based Fiat since exiting bankruptcy in June with government aid. Marchionne, 57, who also heads Fiat, said Chrysler is generating cash flow and reiterated that the Auburn Hills, Michigan-based company will break even this year.

The revamped Jeep Grand Cherokee sport-utility vehicle that begins U.S. sales in June "must be flawless," Marchionne said. The SUV will be the first evidence of quality improvements that the company is counting on for its revival, he said.

"It is a signature car for Chrysler," the CEO said. "It will have quality that is unprecedented in the history of the place."

Chrysler vehicles have been ranked below average by market researcher J.D. Power & Associates and in tests by Consumer Reports magazine. The company's U.S. sales tumbled 36 percent last year, more than any other major automaker, as the industry total fell 21 percent.

'Good Month'

The U.S. auto market is recovering gradually, and March will be a "good month," with an annual sales rate of 11.5 million vehicles, Marchionne said. Large incentives now being offered may hurt the recovery, he said.

Toyota Motor Corp. is using offers such as no-interest financing to win back U.S. buyers after recalling more than 8 million vehicles worldwide. Competitors such as General Motors Co. and Ford Motor Co. have made similar offers.

"There are a couple of players, who will remain nameless, who I considered to be engaged in, for their own benefit, a very unwise and unhealthy process," Marchionne said. "Trying to get that back once you've gone down that path, look at us, we had to go Chapter 11 to clean up our act."

Fiat obtained a 20 percent stake in Chrysler after the U.S. company left bankruptcy and probably will add 5 percent more by year's end when it meets a target to introduce its 500 small car in the U.S., Marchionne said March 26.

The Italian company agreed to share technology, systems and management with Chrysler in exchange for the initial stake, for which Fiat paid no cash. Marchionne has said Chrysler eventually will do an initial sale of shares to the public.

Chrysler plans to report fourth-quarter results by April 30. The company has said it made a $200 million operating profit in the third quarter and ended 2009 with $5 billion to $6 billion in cash, more than planned.

Marchionne has said Chrysler may post 1.1 billion euros ($1.5 billion) to 1.2 billion euros of trading profit, or earnings before interest, taxes and onetime gains, this year. He plans to give a strategy update on April 21.

LINK: Chrysler's Marchionne Says Automaker's Cash Is Reviving Models