Chrysler Scales Down Launch Cadence for 2007

AUBURN HILLS – Chrysler Group President and CEO Tom LaSorda has said the auto maker’s growing assembly flexibility might someday accommodate as many as 14 product launches in a year.

But that day will not come in 2007.

Next month’s debut of the Jeep Patriot cross/utility vehicle, will cap a company-record 10 unveilings. Asked how many introductions Chrysler plans for next year, LaSorda says only: “Slightly less than that.”

This may rub dealers the wrong way. Against a backdrop of bloated inventories, Chrysler sales have been sliding – a trend that is expected to continue Dec. 1 when the auto maker reveals its November sales figures.

“There’s just not people in the showrooms,” says Earl Hesterberg, CEO of Texas-based mega-dealer Group 1, which has more than 140 auto retail franchises, more than 10% of which sell Chrysler brands.

“The issue is, will new product bring their brands out of it?”

Chrysler has not formally tipped its hand on its 2007 launch cadence. Among the expected products are a redesigned minivan and a car based on the Dodge Avenger concept, unveiled in September at the Paris auto show.

But dealers are buoyed by Chrysler’s evolving design.

Nassau, a 4-door concept, is based on Chrysler's LX platform.

“It’s moving in a great direction,” says Eric Ryan, general sales manager at Birmingham Chrysler Jeep in Troy, MI.

The auto maker gives a hint of future direction in the Chrysler Nassau and Jeep Trailhawk concept vehicles, both of which are scheduled to make their debut in January at the North American International Auto Show in Detroit.

The Nassau is based on the LX platform that shoulders the Chrysler 300 and also will be the basis for the Dodge Challenger muscle car when it debuts in 2008. The Trailhawk is based on the new Jeep Wrangler platform and blends refinements from the Jeep Grand Cherokee.

Meanwhile, there is considerable evidence that Chrysler quality is improving “dramatically,” LaSorda tells Ward’s in a wide-ranging interview.

During an 8-city October tour that brought LaSorda face to face with representatives from 75% of Chrysler’s retail network, he says dealers are encouraged.

“If you asked them, there’s a clear indication that quality’s improved dramatically,” LaSorda says.

But, as always nothing comes easily to Chrysler dealers these days.

Jeep Trailhawk concept blends the rough-and-ready Wrangler with Grand Cherokee refinement.

“Some of them said there’s not enough work back in their repair shops,” LaSorda adds. “I said, ‘Get used to it.’”

While Chrysler declines to reveal its warranty costs, a spokesman confirms the auto maker’s expense per unit sold (EPUS) is down 40% compared with last year. And there is a direct correlation between EPUS and warranty costs, the spokesman adds.

Chrysler dealers hope their short-term pain will pay off with long-term gain.

“Hopefully, the (customer) loyalty factor’s there,” Ryan says.

Still, Hesterberg describes his Chrysler business as “very problematic.”

High inventories, which Chrysler has vowed to eliminate by year’s end, are “just part of it,” Hesterberg says.

“They’ve been pushing cars since about last November. But the way you work your way out of problems is at retail and there just hasn’t been any retail spurts for, basically, the whole year. They tried employee pricing and Dr. Z ads and things like that and we never had an uptick.

“The weakness is simply customer traffic,” he says.

Hesterberg singles out the Dodge Caliber as an exception. It replaced the Chrysler Neon as the auto maker’s small car entry and is making a strong showing in the market.

But the Caliber is too little, too late, Hesterberg suggests. And LaSorda agrees.

“If it came out a year earlier, we would have looked even more brilliant,” LaSorda says.

“It’s hard when people come to me and say, ‘Well, how come you’re not into small cars?’” he adds. “But a vehicle program takes us three-and-a-half to four years to do. We should have done it three or four years ago, looking back. The fact was, if you look at the situation of the company, we were hemorrhaging.”

In 2002, Chrysler was coming off a full-year loss of nearly $2 billion.

“So you have to put your money into the products you know you can sustain yourself for profitability and growth,” LaSorda says, referring to high-margin trucks and SUVs.

But in today’s market, he adds, “you’ve got to do both.”

[email protected]