Video: Chrysler in crisis

updated 2/8/2008 3:04:34 PM ET 2008-02-08T20:04:34

Chrysler LLC could reduce its vehicles and dealerships significantly under a tentative plan called Project Genesis, a Chrysler dealer in Texas said Friday.

The automaker has told dealers that it could cut its number of models by as much as half and reduce the number of dealerships selling its cars by as much as a third in an effort to boost efficiency, according to Alan Helfman, vice president of River Oaks Chrysler Jeep in Houston.

“I think they’re trying to get a little leaner, a little more efficient,” he said.

Chrysler spokeswoman Lori McTavish declined to comment, but the company said in a statement that it plans to align Chrysler, Jeep and Dodge product offerings under one roof.

“At this point, we have not made any final decisions regarding our dealer optimization or future product plans, nor has the company set any firm timelines,” Jim Press, Chrysler president and vice chairman, said in the statement.

Press reiterated during a speech at the J.D. Power and Associates Automotive Roundtable in San Francisco that the company hasn’t decided how many models will be cut. He said Chrysler needs to pare down its lineup so similar models don’t compete against each other.

The change will save marketing expenses and help dealers become more profitable, he said.

The consolidation should occur within the next 4 to 5 years, Press said, adding that Chrysler’s forecasts of product cuts are based on estimates and not set in stone.

“There are no numbers. We don’t know how many models we’re going to have. No one knows that,” he said.

He called rumors that the company might sell off parts of its business “hogwash” and said Chrysler is committed to staying viable as an independent company.

“Our company, our owners, have said nothing to me but build an American icon ... there’s no plan to take it apart.”

Helfman said it looks like a good step by the company, but he’s concerned about how it might be carried out.

He said Chrysler could run into trouble with state franchise laws that in part protect dealers from going out of business.

“We have two of the largest dealerships in Houston,” he said. “I’d love both of them to be ... ‘Genesized,’ but tell me how to do it.”

Chrysler earlier this month said it was launching a new ad campaign that includes lower prices on 12 of its vehicles. The campaign aims to cast the automaker as a company that’s listening to buyers and responding with new features.

Chrysler is undergoing a restructuring after private equity firm Cerberus Capital Management LP bought a majority stake in the automaker last summer, In November, the automaker said it planned to cut up to 11,000 jobs, including 8,000 to 10,000 hourly jobs and 1,000 salaried positions.

The cuts came in addition to 13,000 cuts Chrysler announced last February, including 11,000 hourly jobs and 2,000 salaried workers in the U.S. and Canada.

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