Chrysler on Cusp of Second Product Wave

The next major milestone in the evolution of Chrysler’s integration with Fiat will occur within 20 to 30 months, when the auto makers’ passenger-vehicle platforms are consolidated to five from 12.

That process is being judiciously monitored to manage the opposing forces of cost-control and customer satisfaction, promises Sergio Marchionne, who leads both companies. “It’s a tricky exercise,” he says.

“De-contenting” vehicles as a means of driving profit is a thing of the past at Chrysler, Marchionne adds, his voice taking on a notably stern tone during a webcast to outline the auto maker’s 2011 financials. Chrysler’s driving force is to “optimize what is being offered to the consumer.”

This approach, combined with the auto maker’s $2 billion full-year modified operating profit in 2011, appears to have inspired confidence as Chrysler says it expects a 2012 modified operating profit in the range of $3 billion.

The auto maker’s full-year net income was $183 million, an $835 million swing from 2010’s $652 million net loss. Chrysler offers no net-income guidance for 2012, but again Marchionne expresses assuredness, despite the auto maker’s comparatively lean product offerings over the next 10 months.

In contrast with the 16 new or significantly overhauled products Chrysler delivered between 2010 and fourth-quarter 2011, the auto maker has a refreshed-for-’13 Ram fullsize pickup and four all-new offerings in its 2012 pipeline. They are:

Chrysler’s webcast presentation also reveals, for the first time, firm plans to produce a GTS-version Viper.

“I don’t have to apologize,” Marchionne says. “These are very new products.”

But he concedes 2012 is a transition year. “The real story is going to unfurl in 2013.”

By then, or no later than early 2014, product development at Chrysler and Fiat will have converged, says Harald Wester, chief technical officer of the global Fiat-Chrysler management structure devised and implemented last year by Marchionne.

Wester bristles at suggestions the auto makers are setting themselves up for an exercise in badge engineering. “This is absolutely not true,” he tells WardsAuto in a recent interview.

The lightning rod for this claim is a planned Maserati SUV, which will be based on Chrysler’s WK platform that supports the Jeep Grand Cherokee.

“The brand, the heritage, the DNA will absolutely be a Maserati,” Wester promises, noting the SUV – which will be assembled at Chrysler’s Jefferson Avenue plant in Detroit – will feature a unique interior, mechanicals and “a proprietary engine.”

However, he hints it may boast a Jeep 4x4 transmission because the intrepid brand’s gearboxes are “far more advanced” than anything on the shelf at Fiat.

Wester also has responsibility for the Maserati and Alfa Romeo brands.

Standardization and component-sharing is “the future of this business,” says Marchionne. Among the products expected to bow in 2013:

In addition, Chrysler announces this week that first-quarter 2013 will see the arrival of a fifth Fiat 500 variant, the 4-door 500L.

Timing for these rollouts could not be better for some dealers. Bill Golling, who sells all five Chrysler brands, notes a wave of vehicle leases are coming due in 2013. Accordingly, he says his store in Bloomfield Hills, MI, could see some 300 returning customers every month.

And Golling believes Chrysler will deliver. When the auto maker was flung head-long into bankruptcy in 2009 and the only interested lender was the U.S. Treasury Dept., “most of the people were saying Chrysler is not going make it,” Golling recalls. “Guess what’s happened.”

The auto maker rode 1,361,685 U.S.-market sales in 2011 to a 26.1% year-over-year increase and a 1.3-point share gain, according to WardsAuto data.

Again invoking a sober tone, Marchionne says Chrysler does not compromise product development to benefit cost-control, adding both receive “the highest level of attention.”

To do otherwise exposes a company to market risks because “eventually the consumer will catch on.”

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