In a recent day-long presentation more tightly scripted than either Democratic or Republican convention,Corp.'s braintrust tries to convince a gaggle of reporters that it will be the first U.S. automaker to endure a recession without losing money.
"We went into the last recession selling K-cars and with no money in the bank," says Chairman Robert J.. "Today we've got a whole new product line-up and $7.5 billion in the bank."
Using a chart showing thatnow breaks even selling only 65% of the vehicles it ships to dealers (down from 88% in 1992), Mr. tries to show why Chrysler will remain in the black in any recession comparable to those of 1979-'81 and 1991-'92.
So giddy are the top guys in Auburn Hills that President Robert A. Lutz, his tongue only partially, planted in his cheek, declares: "It still pains me to see the Fourth Estate lump us together with our success-challenged competition across town."
The presentation comes one day after Chrysler posts its better-than-expected $680 billion third-quarter profit.
While Mr. Eaton carefully states that boosting market share is not a goal - Chrysler's share of the U.S. car and light-truck market is 15.9% through the first three-quarters of this year, up from 14.3% a year ago - he adds, "Without setting a time frame, 18% to 20% of the U.S. market is not out of question for this company."
Just why does Chrysler feel so bulletproof from the unpredictable winds of economic change?
* It has made $1,955 per vehicle through the first nine months of this year, largely because 65% of its sales are from higher-profit minivans, pickup trucks and sport/utility vehicles, and it sees no end to the shift by consumers away from passenger cars and toward light-trucks.
* It is becoming a viable global player. It is going to build 1.4L and 1.6L engines within Brazil. Its European sales have nearly quintupled to $4.8 billion since 1990, and Thomas C. Gale, executive vice president for product design and international operations, sees Chrysler selling one of every four of its vehicles outside North America by early in the next decade.
* A more cooperative approach to suppliers has helped save $2.5 billion in material and parts costs since 1993. Chrysler's total purchasing budget is about $34 billion. Thomas T. Stallkamp, vice president of procurement and supply, estimates at the current rate suppliers can save another $9.8 billion by 2005. Mr. Stallkamp, however, concedes that the vast majority of the cost-cutting is coming from only 14% of Chrysler's suppliers.
* The ability to add assembly capacity through flexible plant schedules, minimizing the need for huge capital investments. Chrysler now spends 2.7% of its total revenue on engineering expenses (tooling and equipment), compared with's 5.9% and GM's 5.5% Mr. Eaton wants Chrysler engineering costs down to 2.5% of revenue by 2000.
From a capacity of 3.2 million vehicles this year in North America, Chrysler should be able to boost that to more than 3.7 million by 2000, estimates Dennis K. Pawley, executive vice president for manufacturing.
But sooner than later it must decide whether, when and where to build a new plant to replace its ancient 86-year-old Toledo, OH, factory, in order to produce as many Jeep Cherokees and Wranglers as it expects to sell. Mr. Eaton has said that the plant likely will remain in the Toledo area, Jeep's home since World War II.
Total investment in the new Dodge Durango sport/utility vehicle will be about $1 billion, including a new paint shop at the Newark, DE, assembly plant. But with plant capacity of between 175,000 and 200,000 units, and an expected profit margin of about $2,500 per vehicle, the program should pay for itself in less than two years, says Francois Castaing, executive vice president of engineering and head of powertrain operations.
Coming early next fall, the Durango, based on the revamped '97 Dodge Dakota platform, will try to carve out a new niche - between the traditional compact sport/utilities such as Jeep Grand Cherokee,Explorer and Chevrolet Blazer on one side and the larger Chevrolet Tahoe, GMC Yukon and Ford Expedition on the other.
Chrysler also will replace its LH family of full-size sedans - Chrysler Concorde and Dodge Intrepid - a year from now along with its LHS near-luxury sedan and a European variant, to be called the Chrysler Vision, that will also be offered in the U.S. These are not cars that were designed by focus groups. Rakish, low and extremely aerodynamic, the LH replacements won't be confused with the extremely conservative lookused for its 1997 Camry. A closer comparison might be made with Pontiac's new Grand Prix.
Meanwhile, Mr. Gale unveils a 1,200-lb. (544 kg), composite-body China Concept vehicle that would be powered by a 0.8-liter 2-cyl. engine. It could be built in China or India. Mr. Gale says it could be priced at between 45,000 and 50,000 yuan (between $5,400 and $6,000 at current exchange rates).
"We're in discussion with the Chinese government," Mr. Gale says. "We could be there by 2000, but things do take a fair amount of time in China."
Privately, however, Chrysler officials acknowledge that the Chinese market is not as attractive today as it was two years ago. One year ago, Chrysler lost out to-Benz AG, in seeking Chinese government approval for a minivan-type vehicle. But so far the German automaker is still waiting for approval to begin production.