The New Chrysler.
Remember when Lee Iacocca christened the company by that name following the car maker’s near-death experience in the early 1980s? The old Chrysler boss wonders in his new book, “Where Have all the Leaders Gone?” Well, where have they all gone?
In the case of Home Depot, the company’s former leader Bob Nardelli has gone on to run the new Cerberus-owned Chrysler. Nardelli — named the CEO on Aug. 6 — may prove to be just the guy for the job. But he faces an uphill battle because Chrysler’s current problem lies in the area of Nardelli’s weakness: automotive product.
General Motors’ Rick Wagoner faced a similar situation and recruited former Chrysler vice president Bob Lutz to oversee that company’s product development. Lutz was tasked with undoing the damage wrought by previous executives whose background lay in consumer goods like toothpaste. Nardelli’s lumberyard history is worrisomely similar to that of those failed GM execs.
Obviously, Nardelli didn’t get Chrysler into it current fallow product cycle, but he may be ill-prepared to undo the damage wrought by the Teutonic green eyeshades who wrung all of the quality and desirability out of Chrysler’s new models while they were extracting cost.
The problem is that when then-Daimler-Benz took over Chrysler in 1998, it thought the company was a cash cow. But in the cyclical automotive market, the company’s profit abruptly swung to loss and in reaction the German overseers installed to manage the U.S. subsidiary. They slashed the cost out of all of Chrysler’s new product development programs.
The result has been a generation of new vehicles that are either warmed-over versions of their predecessors or noticeably inferior replacements that are designed to be cheap to manufacture. It’s hard to conceive it, but one of those German overseers looked inside the cabin of the Dodge Neon and said, “Nein, this is too lavishly expensive.”
The “new” Jeep Liberty and the Dodge Nitro compact SUVs are just stretched and pulled versions of the old Liberty, a vehicle that was last-in-class in most on-road characteristics when it was new. It has fallen further behind since then.
The PT Cruiser, introduced in 2000 as a 2001 model and derived from the still-older Neon, is the company’s most desirable small-or medium-sized car. Shoot, it is the company’s only desirable small- or medium-sized car.
The wagon/hatchback Caliber could have been a contemporary replacement for the PT Cruiser, but the newer car fails in the execution. Its cabin is relentlessly, inescapably, inexcusably cheap. The exterior design which worked well on the concept version ended up ill-proportioned and hunchbacked in production, perhaps recalling the detested Pontiac Aztek. On the road the Caliber is a disappointment, with undistinguished ride and handling that seem to have enjoyed little development time.
The same is true for all of Chrysler’s other recently introduced cars. The Jeep Compass and Patriot are based on the Caliber and suffer the same issues. The Compass, especially in the green hue favored by its product planners, resembles nothing so much as a road-going toad. The plan had been for the Compass to carry Jeep into Subaru territory, but Chrysler seems to have overlooked the fact that Subaru abandoned the “so ugly its cute” school of design a couple decades ago.
The Chrysler Sebring and Dodge Avenger are similarly flawed. The ungainly exteriors are likely to ward off most prospective customers, and any that penetrate that first line of defense will be repelled by the hard, shiny cockpit materials. The inside of these cars appears to be constructed primarily of plastic rejected as too cheap for the batch of recently recalled Chinese toys. A rear molding around the folded roof of a recently tested Chrysler Sebring convertible had such a sharp edge on it that it was a hazard.
“Those cars are about $400 in interior cost from being competitive instead of worst-in-class,” observed a product planner at another company, who requested anonymity. Most companies would view that as a good use of the money, he added.
“Their interiors were ‘dumbed-down’ in the Sebring-Caliber go-around, almost as if they were blissfully unaware that even affordable cars have smart, high-quality interiors these days,” charged industry observer and gadfly Peter DeLorenzo, who blogs at Autoextremist.com. “It wasn’t just the cheap materials in the Sebring interior, or the poor vehicle dynamics, but the fact that Chrysler took several steps back with the car from where they were.”
Proper dynamic tuning of the ride and handling requires development work rather than more expensive parts. “There is just no substitute for butts in seats,” said the product planner.
General Motors faced similar challenges when Lutz arrived, promising to clean up the company’s notoriously Avis-worthy cockpits. The good news is that GM has turned that problem around. The bad news is that it took five or six years to do it, despite the problem’s front-burner status and a push from Lutz to speed the changes. Absent a Lutz-like character, it seems unlikely that Chrysler can fix its problems more quickly.
But there is one thing Chrysler can do while we are waiting for revamped interiors that would simultaneously shore up its short-term appeal and its long-term direction. There is one weapon in the company’s arsenal that it could use to quickly change public perception of Chrysler’s products that could forge a new identity for the new, New Chrysler — the diesel engine, a legacy of its connection with Mercedes.
This is a solution that requires no additional engineering resources, because Chrysler already sells diesel versions of virtually all of its vehicles in Europe. Diesels are fun to drive, with good power that injects a touch of character into vehicles.
The company builds very nice diesel versions of the PT Cruiser and Chrysler 300 for European markets that could help these aging vehicles stand out in a tough domestic market. Just as importantly, by positioning itself as the diesel company, Chrysler will be prepared for the future. The expectation is that fuel will continue to be expensive, and the better economy of diesel engines makes them attractive, especially for a company whose product line is skewed toward larger, heavier vehicles.
Toyota has enjoyed significant benefit from having cast itself as the hybrid company, and Chrysler could reap similar benefits as consumers come to recognize that diesels provide similar efficiency. The obstacle to a widespread rollout of diesels is the cost of the emissions control systems they require for sale in the U.S.
“Would you be willing to pay an extra $2,000 for a diesel-powered minivan?” asked Ralph Gilles, Chrysler's vice president of design.
Chrysler could consider subsidizing the cost of the diesel power train for the first couple years for the purpose of establishing its diesel reputation and to help seed the market for the cars. Giving away cars for less than it costs to build them sounds like a recipe for failure, but Toyota used this strategy quite effectively to bootstrap the hybrid market.
Chrysler has people who know what is wrong with their current cars and who could fix them, if the right people are allowed to do their best.
“I blame it on the guys who were at the top of the company in the previous regime,” said DeLorenzo. “They willfully allowed mediocrity to rear its ugly head at Chrysler again, even though there is plenty of talent out there.”
I don’t know whether Chrysler will attempt to recast itself as the preferred purveyor of diesels or whether they’ll send their current Playskool-inspired interiors to Movado finishing school. But I do know that their current products won’t cut it and customers know it too.