The Chrysler Group will establish a specialty vehicle unit, much like AMG for Mercedes-Benz, by year end, says Chief Operating Officer Wolfgang Bernhard.

It will start with production of the Chrysler Prowler and Dodge Viper as its product base, but with a clear mandate to expand the stable of specialty vehicles produced by the Chrysler Group. “We will be able to grow it more this way,” says Mr. Bernhard.

Reformulating how the carmaker tackles low-volume and often highly complex vehicles, will “expand the scope of the business and product range,” says Mr. Bernhard of vehicles he says customers have a lot of enthusiasm for and which the Chrysler Group sees as a “huge opportunity for us.” He says it can’t be properly mined within the larger context of the Chrysler Group but he expects it to thrive within its own small business unit.

Mr. Bernhard will not say who will lead the unit, but it will be staffed with representatives from marketing, manufacturing, engineering” and finance who will “run it as a business” complete with decision-making abilities.

It is in line with the overall restructuring of platform teams into product innovation teams, which Mr. Bernhard outlines for attendees of Wednesday’s Management Briefing Seminars in Traverse City, MI.

He confirms to Ward’s afterwards that he has introduced the concept to partner Mitsubishi Motors Corp. and they are not far apart in their approaches to product development. More foreign is the idea of 50 component teams determining parts for vehicles across platforms. Sharing will be extended to Mercedes-Benz as well.

Mr. Bernhard will not say whether the amount of work being re-sourced to new suppliers will exceed the $2 billion that shifted hands in 2000. The new strategy is to reward those who produce the best concept for a part or integrated system – as opposed to the traditional practice of awarding new work to incumbents. And quality is as important as price.

When it comes to quality, automakers are lumped into three classes, says Mr. Bernhard. The Japanese are in the first group as quality leaders, the Europeans in the second group and the Big Three, including the Chrysler Group, in the third. “As long as, in customer’s eyes, we score so low in terms of quality, we’ll never be able to get rid of incentives,” says Mr. Bernhard.

“We need to join, at least, the league of the Europeans. It’s essential and fundamental to our business.” Some issues can be resolved on existing vehicles, others must be addressed in redesign.

-- Alisa Priddle