If you believe the media, it's crisis time at(DaimlerChrysler Corp.) again. There are some people in the industry that claim that this is a natural event, like the coming of the locust, and it happens about every 10 years.
Well, I don't know about that. I believe it has more to do with management decisions, wrong products, stalemated styling, and me-too options.
Financial types tend to react to crisis situations with cutbacks in product plans, capital spending or layoffs. Sure, you may have to cut back on production and lay off some people temporarily when you have a drop in sales, but when you make cuts in your product plans and capital spending you are throwing away the potential for future profits.
The reason a car company finds itself in serious trouble is because it is producing products that the market isn't interested in. The way to turn this situation around is to come up with a plan that consists of innovative and exciting products that appeal to the public.
Some insiders I've talked to sayhas been considering a plan to make all of its large cars rear-wheel drive (rwd).
The reasoning here is to produce a line of expensive cars. All expensive cars have 8-cyl. engines as an option, and 8-cyl. engines require a rwd platform. This, as the reasoning goes, would improve the profit picture, because the profit margin per unit is much greater for luxury cars.
This would have made sense before the merger when Chrysler did not have a luxury car. But Mercedes is its luxury car.
The luxury car market will be a tough nut to crack because of the well-established brands produced by the Japanese, European and American car companies.
There was a lot of thought given in making the decision to originally go to front-drive. And I think that the buying public has come to accept front-drive (fwd). There's more room on the inside (no hump) and fwd's better in snow and ice.
How do you convince people that rear-drive is better? Because of better cornering? Because you can use a bigger engine? The only people that may be interested in these features are police and bank robbers.
I can't believe that this is a product plan that will turn the situation around at Chrysler.
It would cost billions of dollars to build the extra capacity required for the new engines, transmissions, and whatever else goes with the rear-drive design.
A better solution: Instead of spending billions to sell maybe a few more cars, why not make less expensive, innovative and appealing changes to current models?
Lately, many of the new Chrysler cars look the same as they did the previous year. The 300, for example, except for the color, did not change from the car I had last year. There are a lot of things you can do to a car to clearly distinguish it from year to year for little money.
You could make significant changes in the instrument panel and it would make the inside of the car look completely different. You could be innovative, as another example, and offer microwave front crash protection as a safety feature.
Instead of putting more money in an old engine design, why not make a quantum leap forward and put money into the engine of the future? New engine concepts such as the hybrid engine are probably no more than five or six years away. Once there is a breakthrough, everyone will have it. So why not be the first?
The solution to Chrysler's current problem is in developing an innovative and exciting product plan.
Stephen Sharf is a former executive vice president for manufacturing at Chrysler Corp.