Published: November 06, 2009 12:09 am      

Chrysler plan earns mixed reaction

Company promises new lineup, public stock options by 2011.

For more than eight-hours Wednesday, 400 journalists, analysts, dealers, politicians and guests heard Chrysler Group LLC’s CEO Sergio Marchionne and his executives explain the company’s five-year turnaround plan during a lux event at the company’s stylish Auburn Hills, Mich., headquarters.

Since emerging from bankruptcy this summer — with the help of an American taxpayer-funded bailout and Fiat SpA involvement — not much has been officially said or written about Chrysler’s post-bankruptcy plans.

Chrysler, which reported sales dropped 30 percent in October, revealed plans Wednesday that indicate better days await the world’s sixth largest automaker.

In addition to introducing a new streamlined logo, Chrysler announced it plans to replace its vehicles’ boring interiors and give all vehicles upgrades, overhauling or replacing them all by 2012.

There is a promise of a seven-seat crossover vehicle in 2011 and a plan to introduce 21 new models in the coming years — two models will be in the small-car market where Chrysler doesn’t compete but Fiat does.

The proposed new lineup is an exciting prospect for some local dealers.

“I am excited about our five-year plan,” said Aaron Arriaga, new car sales manager at Button Chrysler Dodge in Kokomo. “From the Fiat 500 to vehicles being built off of the Fiat platform, we have some exciting stuff coming. I am looking forward to customers giving us a second chance. They should look at us as leaders, not followers. We want to be the new leader for the future of the automotive industry.”

Also included in the company’s new plan, as Chrysler’s controlling owner, Fiat will bring its 1.4-liter, 4-cylinder MultiAir engines and other 4-cylinder engines to the U.S. within two years. By 2014, 42 percent of all Chrysler vehicles will have a Fiat-designed engine.

Finally, executives say the company will be profitable and will offer public stock by 2011, as well as doubling its global sales to 2.8 million vehicles by 2014.

“If they can do all this, it’s fabulous. If they can increase their market share, it’s marvelous. I am just not sure it’s doable. Their plan is extremely optimistic,” said Jim Hossack, an automotive analyst for AutoPacific.com. “For them to take full advantage of what they are planning with small cars, there would have to be high-fuel costs. But with gas being $2.50 a gallon, I don’t think people are that interested in fuel economy.

“They want to use the dual-clutch transmission, and that will get you an extra half mile per gallon, but I don’t think people care about an extra half mile. That’s not going to make a whole lot of difference.

“They have high market projections, but I don’t see a lot of new products.”

Bill Visnic, senior editor of Edmunds.com, was pleased with what Chrysler plans to offer.

“The general feeling I left with was that they have a plan — an aggressive plan that leaves a lot of assumptions,” said Visnic. “They have plans to increase their market share and volume. Now, they need the products to back it up.

“Since they don’t have structural costs, they can invest in product development and get better. Fiat knows how to get better, but they are going to need additional products to support their projections.

“Right now, I would have to say it is a leap of faith until they improve their existing nameplate and make significant improvements with their current products.”

According to Edmunds.com, through September 2009, Chrysler has a 9.1 percent market share, and it takes 124 days for a Chrysler-Dodge-Jeep vehicle to be sold from a dealer’s lot.

Both figures are at the bottom of industry averages.

Yet to save money, this summer Chrysler eliminated more than 700 dealers. It now has 12 percent of the automotive industry’s dealerships. Eighty percent of the dealerships now sell all Chrysler’s brands and the company wants to increase that to 100 percent by 2011.

David Cole, chairman of the Ann Arbor, Mich.-based Center for Automotive Research, also attended the event. So far, he said, the marriage between Chrysler and Fiat has “gone very well.”

“I am really impressed. They don’t have a lot of early products, but they are working together in positive ways,” he said. “But there is still much work to do. They are facing a big challenge, but so is everyone else in the industry. We need an uptick in the market.”

While some are hopeful about the newly announced plan, others remain guarded. Shawn Fain is among them, and said he wants to see a little more meat to his company’s plan.

“I’ve been through this twice already, so I am skeptical of what I hear. Talk is cheap with me,” said Fain, of United Auto Workers Local 1166 and a member of the UAW/Chrysler National Negotiation Committee.

“They have laid out a plan, but I really want to see the details. Talk is cheap with me, but it is better than the alternative if this would not had happened. Otherwise, I wouldn’t be here talking to you.”

• K.O. Jackson is the Kokomo Tribune’s business writer. He can be reached at 765-854-6739 or via e-mail kirven.jackson@kokomotribune.com