Part 2 & 3 Updates
* Expansion of Chrysler engineering workforce
* Jeep Wrangler to continue. Patriot /Compass and Liberty replacement in 2013.
* Ram in heavy trucks (18-wheelers)?
* Hemi and (we believe) Cummins to continue, 6.4 Hemi coming with ~ 450 hp
* Both small and large Fiat vans to replace Sprinter
* Chrysler to handle large displacement and hybrid engines for Fiat worldwide
* Regular and twin turbo Pentastar V6 engines
* International expansion through Lancia, Chrysler, Dodge, Jeep
* Dual-clutch automatics to arrive, 4-speeds and (probably) Mercedes automatic to leave
* Journey, Caravan, Avenger: new engine, new interiors, exterior refreshing
* 2014: all new Grand Caravan
* New C-sedan, B-hatch, D-car, 7-passenger crossover — all but crossover based on Fiats
* Repackaging around lifestyles rather than ... whatever they were using before
* Possibly, new Viper for 2013/2014
* Quality improvements will continue and extend to dealer service
Part Two
Dealers. Dealer network productivity is to be increased, with redefined dealer standards. Chrysler went from 21% of dealers to 12% in the US, losing 2,831 dealers in the last 19 years. Project Genesis is continuing as planned, to increase franchise attractiveness, profits, and throughput, providing a sound base for reinvestment. Full implementation is due for 2011. At the moment, Chrysler has around 440 sales per dealer in metro areas; the goal is for them to go up over 700. Tight credit is a serious problem especially for dealers — and Chrysler dealers tend to sell fewer cars per month than competitors. New dealer financing will replace Chrysler Financial by December.
Just 36% of dealers have a return on sales greater than 1.5%; they expect this to increase to 60% by 2014. Dealer support is being expanded to include financial skills. Planned growth of commercial vehicle sales will require overcoming strong competition and changing service hours to meet business owners’ needs. In general, dealers need to overcome problems of high land cost, and customer convenience (old or suboptimal locations).
A green facility initiative is planned to both increase environmental friendliness, and to cut costs.
A North American version of the Fiat 500 is expected to increase foot traffic and new customers. It will mainly be sold in key metro areas with specific interior showroom branded salons, and a high degree of customization through accessories. The 500 will have dedicated sales and service staff.
Since June 10, dealers have committed over $250 million in capital investment, with 20 new buildings, 200 major renovations.
Fiat has an established set of dealership standards and methods which was already rolled out to Chrysler dealerships. 61 training sessions were held in 55 days for over 5,200 people already. The standards cover customer cdare, sales, post-sales, and management, and are being phased in through 2012, with continuous improvement required. While Chrysler had implemented similar moves in 1997, they were dropped after the Daimler acquisition. A team of 150 people is committed to increasing dealership performance, including in service. Over $120 million is being invested in 2010 — $500 million over five years.
Jeep. Jeep is aiming to double its global sales from 2008 numbers, and its leader, Mike Manley, wants to take it “back to its rightful place of being the global SUV brand.” Jeep was apparently the largest SUV brand in the world through 1990 and today is #6 in the world. Their largest group of owners is “Dreamers,” time constrained by family and work, but wanting authentic gear for the time they’ll be able to “do more and dream less.” The new campaign is “i live. i ride. i am. Jeep.” (e.e. cummings joke goes here.) The plan is to re-establish the brand with a new look, feel, and attitude; renew the customer-brand connection with lifestyle engagement; and deliver a clear call to sales action.
Wrangler remains the anchor of the Jeep brand and will be refreshed in both 2010 and its 70th anniversary, 2011. There will be new derivatives and special models based on the Wrangler.
Jeep Liberty will move to a Fiat platform in 2013.
Core Jeep customers were truck-based, wanting capability and 4WD. Expanded SUV customers want unibody vehicles, fuel efficient, with on-road dynamics. The shift from truck to car based SUVs is growing. All Jeeps must have certain aspects; volume models have specific attributes in addition. (These attributes include the grille, short overhang, trapezoid wheel-arches, functional interior, open-air concepts, visibility, durable materails, handling in bad weather, advanced four wheel drive, towing capacity, and a variety of specific off-road capabilities.)
Manufacturing. (These changes are already being implemented and numerous before/after photos were shown.) Safety will be improved with metrics considering “near misses” as well as serious injuries. “World Class Manufacturing” is designed to cut costs and increase quality. Workstations will be redesigned to improve ergonomics and prevent injuries, back problems, and other issues. More just-in-time delivery systems will be used, with material delivered to the point of use and less operator walk time. Machines are being cleaned and restored to their original state, allowing for easy inspections of their status (e.g. seeing leaks), and work conditions, including lighting and flooring, are being improved. Chrysler once again involves workers in planning.
Supply chain optimization is being discussed by Dan Knott, head of purchasing, but the same words have been used before. Apparently Chrysler is slated to buy $28 billion of components in 2010, Fiat $40 billion; Chrysler’s purchasing power will increase. The number of unique suppliers is now 48%; by 2014 that will be 35 or less% (estimated). A new organizational structure is being set up which reflects Fiat’s, with, for example, Chassis and Itterior, Commodity, etc being replaced by Metallic, Mechanical, Services, etc. Regional sourcing offices in Italy, Austria, India, China, and Korea will leverage Fiat’s international strengths. There will be weekly synergy meetings, aligned teams, and shared strategies for commodities and major suppliers. Parts will be commoditized where possible. There will be regular top-level supplier meetings, an expanded supplier advisory council, regular communication, accelerated processes for supplier claims, and a new group to optimize inventory.
Supplier quality is now part of the Purchasing organization, with 80 new experts (a 45% increase) by 2010, increased engagement with suppliers, and better validation of supplier products and processes.
Supplier costs savings are being returned. The old Chrysler plan (SCORE) of splitting cost savings from supplier ideas is being brought back, with Chrysler and supplier each getting 50% of the savings. This resulted in billions of dollars in savings when implemented in the 1990s.
Still no word on 200C. That might come with the 200C.
Part Three
Chrysler brand. CEO Olivier Francois. “Why would a Frenchman who works for an Italian company work for an American company in Michigan?” (His question.) Sometimes distance gives perspective. “The pathway is passion. ... to make hearts race with every glance. It is an American sensation.” (He went on for a while like this.) “A visit to the Chrysler museum is such an experience.” Lancia was in a similar condition as Chrysler when he came. He started with a 4% market in Italy with six nameplates, in 2009 at 4.8% with four nameplates. Lancia focused on three basics, product, marketing, and network. In the US, Chrysler has five nameplates with total 1.8% share, looking for 3.4% share with more nameplates by 2014. “It’s about 84 years of history.” Comfort, performance, styling, innovation, quality, value, efficiency. Walter P. Chrysler: “I gave the public quality, beauty, speed, comfort, style, and power, all at a low price.” Quality, value, and efficiency require hard work but the rest is also needed for Chrysler.
Coming in Q1 2010: 300 Sport edition, Town & Country Fashion Edition, PT Cruiser Final Edition, Sebring Ocean Edition. This indicates the PT Cruiser will not continue past 2010 after all. Coming in Q4 2010: reshape the Sebring and refresh Town & Country.
Chrysler’s ambition is to be distinctive at all these levels. The new attributes must be established. Refined, balanced performance, provocative styling, intuitive innovation, craftsmanship, pride/value, efficiency — responsibility as well as mileage. We need to expand the portfolio, improve quality, create exciting designs.
Chrysler’s ambition is being different, remembered, and aspirational, not mimicking another automaker; and having an integrated image across the board, products, merchandising, showrooms, auto shows, advertising, catalogs, web sites. Everything must reflect aspiration. Brochures should be aspirational and elegant. 40 million visits so far to chrysler.com — “Paradise or Hell for our brand image?” — no brand image on the existing site; a new site goes live in a few days. It will set a new tone for the brand. New showrooms coming, too. New car show displays are on their way. New catalogs are done. New product is coming. New advertising is coming. “We have done this in one month but the bigger work is to be done.”
Mainstream shows and events are expensive but have low visibility. It is time to find new methods. It is time to present new vehicles like models on a runway, not a highway. There's also a new logo. Brand equity must be increased. Chrysler will stand one notch above everyone else. Chrysler will however also have B, C, and D segment cars as well as the CUV.
Mopar. CEO Pietro Gorlier. Mopar continues to look into other channels including wholesale retail, independent repair shops, and collision parts with a price matching program. Mopar has been adding techs and service advisors, and developing an “express lane” system for immediate service on their car, as well as adding a market-driven smart pricing program. Accessories are now being designed during vehicle development, engineered to ease installation, with availability at vehicle launch. The goal is for 80% of dealers to have weekend and extended hours for service. A new wiTech (wireless) diagnostic system is being added, with new wiring diagram applications (the first dynamic wiring information system, a design driven by technicians and using vehicle-specific on-demand information). The parts network reorganization should save 13% of trips. A wave of actions started in June 2009 to improve parts distribution logistics.
2009: fix the basics; 2010: target industry benchmarks, enforce dealer standards; by 2012, become best-practice so customers view the service organization as an asset.
Quality of customer care drivers: brand-customer interface (product, customer care center); dealer-customer interface (sales, service, parts/accessory experiences). Rigorous key performance indicator process needed to drive success, excellence can only be achieved when everything exceeds customer expectations. There must be proactive customer support and a closed-loop approach with follow through. (This echoes the old Five Star program as it was originally designed.)
A single U.S. toll free number will be created for each brand, Chrysler, Dodge, Jeep, and Ram, to customize the owner experience - 800 CHRYSLER, 877-I-AM_Jeep, 800-4aDodge, and 877-RAM-5720.
Distribution. Most of the international outlets are joined with Daimler. Sales will be integrated into the Fiat organization in Latin America and Europe to provide full support. In Asia, Chrysler has been more self sufficient and will provide its distribution structure to Fiat.
International product development. Jeep will be expanded in international market. Chrysler and Dodge have been spread thinly. In the future, a global portfolio of vehicles will cover 2/3 of global market segments with powertrains that reflect international demand. There will be B and C segment hatchbacks, minivans, and CUVs for Dodge and Chrysler, which will dovetail with Jeep vehicles. The goal is for 500,000 sales/year, up from 144,000. All of the Chrysler global product portfolio will be refreshed by 2012, with half derived from Fiat platforms by 2014.
Both Lancia and Chrysler have similar problems, including incomplete portfolios, limited distribution, low brand recognition. The alliance can selectively used either the Lancia or Chrysler brand in any given market for a better focus — with a full market portfolio in each market. The Dodge and Ram brands will continue in appropriate markets as regional or niche brands. Chrysler models will be offered to Fiat for distribution under Fiat brands to give Chrysler access to more volume. Chrysler Australia will move to Iveco.
Financial services are already moving from Daimler.
Jeep expansion will include five global models.
International. (Mike Manley) - Dodge was brought out in 2006 with Caliber, Avenger, Nitro, and (later) Journey.2007 was the best year ever with 240,000 units and 2008 was doing well before the market collapse. 30% of volume for 2008 was Dodge, 29% Chrysler, 42% Jeep. Profitability has been an issue with Dodge adding volume but not profitability and Chrysler has had profits squeezed by competition. Most national sales companies are integrated with Daimler at this time. Latin America is the largest share, then Europe, then Asia. “Three brands, but little volume.” Market share is little over 1%. Fiat has a strong distribution structure with 3 million vehicles in Latin America vs Chrysler's 45,000 and they have a full infrastructure. In Europe, Fiat has over 10 times the volume. In Asia, the businesses are similarly sized but Fiat has more partners.
Chrysler does not compete in the A, B, or C segments where half of international trade is. It does compete well as a niche manufacturer but there are problems going forward even with this model.
Canada. Reid Bigland, CEO of Chrysler Canada, which has three plants (Windsor, Brampton, Etobicoke), three regional sales offices, three parts facilities, and one headquarters. Around 3% of Chrysler sales come from Canada, and around 30% of Chrysler vehicles come from Canada. (Allpar note: Chrysler has been strong in Canada with a higher market share than in the US.) Chrysler Canada’s market share was around 13% for numerous years, but has fallen in 2009 with a forecast of 11-11.5%. (The share was 17% in 1999 and 2000). Chrysler was on a roll in 2007, gaining more market share than any of the competitors, and had two of the top five best sellers in the country. The 2008 crises put an end to the gains. (Chrysler Canada did not file for bankruptcy.)
Canadian sales is dominated by small and compact vehicles (39%), pickups (17%), and people movers (14%) - that’s 70% of the market. Midsized sedans are just 11%. 83% of vehicles sold in Canada have four cylinders. There are clearly opportunities for Fiat Group-based vehicles.
Chrysler still has a 70% market share in Canadian minivans, got a 2009 J.D. Power most dependable award (three-year reliability), has best gas mileage; best selling minivan in Canada throughout its life. Journey remains the best selling crossover (out of 39 vehicles). It’s the top pick for IIHS.
In Canada, Chrysler has 440 dealers, all selling vehicles from each brand; 88% are profitable, with a 25% return on investment (figures are September 2009 YTD.) Five new dealerships were announced or opened in the past 30 days and existing dealers can invest in their facilities. Canada has gone from around 490 dealers in 2004 to 440 in 2009. The goal is to return to 13.8% market share.
Mexico. Joseph Chamasrour, CEO of Chrysler Mexico: 150 dealers, all selling all Chrysler brands... and Mitsubishi, since Chrysler is the distributor in Mexico for Mitsubishi. Customers are satisfied with the brands according to J.D. Power (except Chrysler brand which is #14 of 17 manufacturers). Mitsu satisfaction is #5, Jeep #6, Dodge #7. Most dealers are profitable. Over 95% of the vehicles sold are Jeep and Dodge (excluding Mitsu.)
Chrysler has been gaining in the Mexican market by .5% while Volkswagen, Nissan, Ford, and GM have all fallen. Free trade agreements opened Mexico to numerous new brands - there are now 333 nameplates in Mexico, up from 240, and 52 brands, up from 41 in 2003. Chrysler market share has swung up and down from 9% to 11.8% through 2009.
The Mexican market is 55% pasenger cars, 15% SUVs, 20% trucks, 10% minivans/sport tourers. Chrylser was #4 in 2006, #1 in 2007, #2 in 2008, and so far is #2 in 2009 despite a three month factory shutdown. Journey is #1 in its segment. Chrysler has a 33.6% share of the minivan/sport tourer segment this year up from 28.4% last year. Journey has double the sales of its nearest competitor. Dodge has had five years of growth in truck market share with a #1 award for Dakota by J.D. Power in 2009; and current share of 27.5%, #2 in the market (up from 12% in 2004). Passenger cars are a key challenge with share dropping from 8% in 2006 to 5% YTD in 2009 - a steady decline.
