Chrysler's Golden Opportunity

It's pretty easy to see how Cerberus Capital Management can make Chrysler profitable fast. And the answer is not in the NAFTA region.

As the private equity boys look for ways to boost Chrysler's bottom line, all they have to do is examine the company's recent success overseas.

Chrysler says sales rose 10% in non-U.S. markets during the second quarter. It will sell about 250,000 vehicles outside North America this year. It hopes to boost that to 400,000 at the end of the decade. That's about two assembly plants worth of production, and it points the way to what could be the salvation of the company.

Chrysler faces an uphill fight in the American market. It will be lucky to hold onto the market share it has, much less gain any back. And yet, to make the kind of money that Cerberus wants to earn, Chrysler will have to run its plants at full capacity. Thats how you make money in this business.

One way to do that is to close a couple of plants and stuff more production into the ones that remain. But a better way is for the company to keep all the plants and find enough customers to keep those factories humming. That's where the overseas strategy comes into play.

Since corporate average fuel economy and carbon dioxide regulations are going to force North American auto makers to build a full line of vehicles that will be competitive in the international market, why not take advantage of the hand you've been dealt?

The weakening U.S. dollar is making this strategy more and more attractive by the day. The dollar is sinking against every major currency in the world (except the Japanese yen), meaning the U.S. is about to become a very attractive export base.

Even GM's purchasing boss, Bo Andersson, says he'll start to shift his sourcing away from China and back to the U.S. if the dollar keeps on dropping. America's massive budget and trade deficits promise to keep the greenback weak for decades to come.

I can see a day when Chrysler is so successful exporting new cars overseas that it has to triple-shift its assembly plants and start hiring UAW workers back.

Chrysler is making great gains in the European market, one of the payoffs from the Daimler relationship. Now it needs to go out and repeat this success in a lot of other markets.

But this also points to the current management's greatest weakness: not a lot of overseas experience. If Cerberus wants to have Chrysler make a lot of money fast, this is clearly where it has to concentrate.

Right now Chrysler primarily is aiming its efforts at the 16 million-plus American consumers who will buy a new car this year.

Why not broaden the effort and use the company's existing asset base to go after an additional 55 million shoppers in the global marketplace? That would give Chrysler a license to print money.

John McElroy is editorial director of Blue Sky Productions and producer of “Autoline Detroit” for WTVS-Channel 56, Detroit, and Speed Channel.