Francois Mori  /  AP
The Chrysler 300 C is an important car in a pivotal year for the company, which must start making money before a public stock sale can happen.
By
updated 1/10/2011 4:38:52 PM ET 2011-01-10T21:38:52

The Chrysler 300, once a hot-selling sedan distinguished by a tall grille and big wheels, will attempt a comeback at the Detroit auto show. It's an important car in a pivotal year for the company, which must start making money before a public stock sale can happen.

The new 300, which was revealed Monday during the show's opening media day, keeps the basic look of the old: It's a muscular car with a long hood and short back. But the remade version is sleeker, and Chrysler toned down the gangster-mobile grille and replaced its round headlamps with subtle rectangular ones. Gas mileage went up 8 percent and the interior has softer-looking surfaces and cool-blue dashboard lighting.

Chrysler wants it to attract a broad range of buyers, from those who want a larger car to those who seek high-performance luxury.

  1. More must-see stories
    1. The Hartford Courant, Political
      Wild Wall St.

      Has the market volatility got you nervous? These cartoons may give you a little comic relief.

    2. Cyber-thieves create fake Kelley Blue Book site
    3. US says Reebok toning shoes don't really
    4. Can you live on $9 an hour? Play the game

Like the company that builds it, the 300 used to generate millions in profits but has been neglected for years. Introduced in 2004, sales peaked in 2005 at 144,000, but barely topped 37,000 last year. And just like the reborn company, the big car has the odds stacked against it. Although the new car's gas mileage went up 2 mpg on the highway with a V-6, the big car comes out at a time when experts predict that gas prices could reach $4 per gallon this year.

Chrysler lost $453 million in the first three quarters of 2010 and is the auto company most vulnerable to a gas price spike. Its top-selling models are Jeeps, pickup trucks, sport utility vehicles and vans. And despite an intense effort to update or replace 16 outdated vehicles in the past year, Chrysler still lags competitors in fuel economy. Its lineup last year got an average of 19.2 mpg, below the expected industry average of 22.5 mpg, and far below industry leader Toyota Motor Corp. at 25.4 mpg.

Even Detroit rivals who once relied on SUVs and trucks as Chrysler does, have shifted smaller. Ford has introduced the Fiesta and new Focus in the past year, both of which can get nearly 40 mpg on the freeway. Chrysler's small offerings, except the Fiat 500 minicar, are in the low 30s.

"If we are looking at $4 plus-gallon gasoline, it's got to nick their real money makers," said Joe Phillippi, president of New Jersey-based AutoTrends Consulting LLC. "They run the risk of losing sales to all other competitors that have a big stable of high fuel economy vehicles."

Still, the company is better off than it was in 2009, when it required a $12.5 billion government bailout and a quick trip through bankruptcy court to avoid liquidation. The U.S. government installed Fiat CEO Sergio Marchionne to manage the company and he saved millions by sharing engineering, design and technology with Italy's Fiat. Chrysler also closed plants and slashed the work force from 80,000 in 2007 to the current 52,000.

The resulting cost reductions lowered Chrysler's break-even sales level to 2 million cars and trucks worldwide. But the company sold only 1.5 million vehicles last year, meaning it must boost sales by one-third this year just to stem the losses. It will need even higher sales to impress Wall Street with net profits.

Such a huge sales gain in one year is rare in the auto industry. Even South Korea's Hyundai, which had a banner 2010 in the U.S., could manage a mere 24 percent increase.

Some signs of progress are already evident. Engineers went through the cars and trucks, eliminating rattles, firming up suspensions and adding insulation to make them quieter. Cheap-looking plastic interiors were replaced with soft materials. Seats became more supportive. The upgrades made a huge difference for the new Jeep Grand Cherokee. Sales tripled in December from a year earlier, when Chrysler still sold the old model.

'Better stuff'
Chrysler should benefit if total auto sales in the United States rise to more than 13 million this year — as many analysts expect — from last year's 11.6 million, says Aaron Bragman, an analyst with IHS Automotive. "They have stuff that is so significantly better than what they had before," says Bragman. "It's no longer rental car specials, its significantly improved vehicles."

The redesigns are aimed at keeping the company going until newer, more efficient models with Italian technology arrive in the U.S. in the next couple of years, says Bragman.

The new 300 is to get 27 mpg on the highway, not bad for a big car but not an attractive buy when gas is expensive.

Chrysler said it will put an eight-speed automatic transmission in its all-new 300 luxury sedan that will push the big car to 30 mpg on the highway. Chrysler brand CEO Olivier Francois said the transmission will give the luxury car class-leading fuel economy. He said the mileage should help sales if gas prices rise to $4 per gallon this summer, when the eight-speed will come out.

When the current 300 came out, some called it a "baby Bentley" because of its likeness to the exclusive British cars. Its grille and big wheels were jarring to some. Others loved the sedan's 1920s gangster look and it became a status symbol in suburban neighborhoods and cities. Sales stayed strong for several years but started to slide by 2008, when gas prices jumped and the design began to look dated. Luxury car sales generally drop when gas prices go up.

The starting price is around $28,000, and it's expected to compete with Detroit sedans like the Cadillac CTS, Buick LaCrosse and Ford Taurus. But Chrysler said well-equipped versions with the V-8 Hemi engine can compete with the more expensive BMW 5-Series and Lexus LS 460.

The 300 and other Chrysler vehicles also have been wounded by quality issues. For years the company has relied on bold designs and performance to attract customers rather than reliability scores from outside groups such as Consumer Reports magazine.

Last year the Chrysler brand ranked last of 27 brands in the magazine's reliability survey, while Jeep ranked 20th and Dodge was 24th. No Chrysler vehicles scored above average in reliability.

Marchionne, whose company was given 20 percent ownership of Chrysler, has said that he'd like to repay the government loan and return to the stock market with in initial public offering late this year.

The U.S. government owns 10 percent of the company and would sell at least part of its stake to recoup more of the bailout money. A union health care trust fund owns most of the rest at 68 percent, while the Canadian government controls 2 percent.

Phillippi says Chrysler can't go to Wall Street with an IPO in late 2011 unless it makes money earlier in the year.

"If you can't post a net profit in a market that's a million units better this year than it was last year, you're going to have a really hard time selling your story to the Street," he said.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Photos: Production models

loading photos...
  1. Volvo’s C30 electric crash test display is shown during the media preview of the 2011 North American International Auto Show at the Cobo Arena in Detroit. Volvo is hoping to burnish its reputation for car safety at the event, which features over 30 debuts of vehicles made by automakers from around the world. The show is open to the public from January 15 to 23. (Paul Sancya / AP) Back to slideshow navigation
  2. A model poses in front of an Audi A7 during the media previewfor the show. (Mark Blinch / Reuters) Back to slideshow navigation
  3. The 2011 Jeep Compass is unveiled. Chrysler Jeep is celebrating its 70th year in 2011. (Mark Blinch / Reuters) Back to slideshow navigation
  4. A Chevrolet Corvette, right, and a 2011 Corvette ZR1 sit on display. (Kamil Krzaczynski / EPA) Back to slideshow navigation
  5. The 2011 Ford Explorer, winner of the 2011 North American Truck of the Year award, on display at the 2011 North American International Auto Show. (Rebecca Cook / Reuters) Back to slideshow navigation
  6. Volvo’s Electric C30 car is powered by a lithium-ion battery and can be charged from a household power socket. (Stan Honda / AFP - Getty Images) Back to slideshow navigation
  7. Venturi’s high-voltage buggy concept includes a 300-horsepower engine. (Paul Sancya / AP) Back to slideshow navigation
  8. The new Dodge Ram 3500 truck is equipped with a powerful 350-horsepower engine. (Stan Honda / AFP - Getty Images) Back to slideshow navigation
  9. The 2011 Camaro RS convertible. (Rebecca Cook / Reuters) Back to slideshow navigation
  10. A model poses next to a Dodge Charger Hemi. (Tannen Maury / EPA) Back to slideshow navigation
  11. The 2011 Dodge Challenger SRT8 392. (Rebecca Cook / Reuters) Back to slideshow navigation
  12. The new Chevrolet Sonic small car will go into production later this year for the 2012 model year. (Stan Honda / AFP - Getty Images) Back to slideshow navigation
  13. Porsche returns to the 2011 North American International Auto Show with the Cayman R sports car. (Paul Sancya / AP) Back to slideshow navigation
  14. The new Bentley Continental GT will launch from standstill to 60mph in just 4.6 seconds and has a top speed of 197 mph. (Stan Honda / AFP - Getty Images) Back to slideshow navigation
  15. Toyota Executive Bob Carter introduces the Prius V midsize hybrid-electric vehicle, left, and the Prius C concept, right. (Paul Sancya / AP) Back to slideshow navigation
  16. Ford's Mark Fields introduces the Ford C-MAX electric vehicle. (Tannen Maury / EPA) Back to slideshow navigation
  17. Dr. Martin Winterkorn, Chairman of Volkswagen Management Group, introduces the new Volkswagen Passat. (Bill Pugliano / Getty Images) Back to slideshow navigation
  18. The Porsche 918 RSR sports car Has a V8 engine that delivers 563 horsepower and can jump to 767 horsepower with the push of a button. (Friso Gentsch / EPA) Back to slideshow navigation
  19. Audi introduces the new A6 Hybrid. (Scott Olson / Getty Images) Back to slideshow navigation
  20. A model poses next to the Ferrari 458 Italia. (Kamil Krzaczynski / EPA) Back to slideshow navigation
  21. The BMW 650i convertible is unveiled. (Mark Blinch / Reuters) Back to slideshow navigation
  22. The Mercedes Benz SLS AMG E-Cell has four electric motors (one for each wheel) and can accelerate to 60 mph in 4 seconds. (Paul Sancya / AP) Back to slideshow navigation
  23. Ford’s President and CEO Alan Mulally presents the Ford Focus ST. (Tannen Maury / EPA) Back to slideshow navigation
  24. Ford’s Executive Chairman Bill Ford introduces Ford’s electric lineup: (Left to right) the C-MAX electric car, the Transit Connect electric truck, the Focus electric car and the C-MAX hybrid. (Stan Honda / AFP - Getty Images) Back to slideshow navigation
  25. The interior of the Buick Verano, GM’s first upscale compact car for a luxury brand, is shown. The Verano is GM’s only new model to debut at the event. (Geoff Robins / AFP - Getty Images) Back to slideshow navigation
  26. The Chrysler 300, once a hot-selling sedan, is redesigned with a sleeker look. (Tony Ding / AP) Back to slideshow navigation
  27. Tom Stephens, vice chairman of General Motors, holds up the 2011 North American International Auto Show Car of the Year trophy, which this year was awarded to the Chevrolet Volt. (Paul Sancya / AP) Back to slideshow navigation
  28. Two of the new Mercedes Benz C Class vehicles are shown at a Mercedes Benz event the night before the official start of the media preview event. (Bill Pugliano / Getty Images) Back to slideshow navigation
  29. Michael Price cleans a Cadillac CTS-V coupe race car on the show floor. (Rebecca Cook / Reuters) Back to slideshow navigation
  1. Editor's note:
    This image contains graphic content that some viewers may find disturbing.

    Click to view the image, or use the buttons above to navigate away.

  2. Editor's note:
    This image contains graphic content that some viewers may find disturbing.

    Click to view the image, or use the buttons above to navigate away.

  3. Editor's note:
    This image contains graphic content that some viewers may find disturbing.

    Click to view the image, or use the buttons above to navigate away.

  4. Editor's note:
    This image contains graphic content that some viewers may find disturbing.

    Click to view the image, or use the buttons above to navigate away.

  1. Image:
    Paul Sancya / AP
    Above: Slideshow (29) On the catwalk in Detroit - Production models
  2. Image: GMC Sierra All Terrain HD Concept
    Paul Sancya / AP
    Slideshow (12) On the catwalk in Detroit - Concept cars

Explainer: The best cars of the decade

  • Image: Ford Focus
    Ford Motor Company  /  Ford Motor Company
    When the European-developed Focus replaced the long-overdue-for-retirement Escort (which itself debuted at a world car when it replaced the Pinto) in 2000 critics cheered its superior combination of small car practicality, handling and efficiency in a crisply styled package.

    Every year, the North American International Auto Show (better known as the Detroit auto show) kicks off with the announcement of the North American Car of the Year.

    The award is based on factors such as innovation, design, safety, handling, driver satisfaction and value, and it’s determined by a group of about 50 (currently there are 49 jurors) U.S. and Canadian journalists representing newspapers, magazines, and websites across the continent. (Full disclosure: this includes msnbc.com in the form of this humble contributor.)

    The jury whittled down a list of all the all-new and mostly-new cars this year to three finalists: The Chevrolet Volt, Nissan’s Leaf and the Hyundai Sonata.

    The Volt, the centerpiece of GM’s comeback, was named winner for 2011. A list of past winners shows the only predictable pattern is that excellent cars usually win the competition.

    Here’s a look back at the winners over the past decade.

  • 2011 Winner: Chevrolet Volt

    Bill Pugliano  /  Getty Images

    Jurors appreciated the Volt’s ability to drive long distances as needed using gasoline power, making its 40-mile all-electric range practical in a car that can serve as the driver’s sole source of transportation. General Motors’ Voltec electric drive system will proliferate to variety of models and body styles, making the Volt a significant milestone. GM has been on a roll in recent years, winning North American Car of the Year in 2008 with the Chevrolet Malibu and in 2007 with the Saturn Aura.

    Story: GM’s Chevy Volt named 2011 Car of the Year

  • 2010 winner: Ford Fusion Hybrid

    Ford  /  Wieck

    The 2010 Fusion Hybrid was judged to be the best hybrid yet, with a winning combination of spaciousness, price and overall normality in a thoroughly efficient family sedan. Buick’s superb LaCrosse sedan and Volkswagen’s always-fun Golf were runners-up.

  • 2009 winner: Hyundai Genesis

    embedded
    Paul Sancya  /  AP

    Hyundai heralded its advancing engineering and design prowess with the launch of the aptly-named Genesis premium sedan, a feat which earned the company a North American Car of the Year victory. The car was praised for its comfort and build quality, which were unprecedented for the Korean company. Runners-up were the label-defying family box Ford Flex and the surprisingly zoomy Volkswagen Jetta TDI.

  • 2008 winner: Chevrolet Malibu

    GM  /  Wieck

    General Motors won for the second year in a row with almost the same car. The Malibu is built on a lengthened version of the same platform as 2007 winner Saturn Aura. The Chevy offers more space at a family-friendly price. The sporty Cadillac CTS and Honda’s ever-popular Accord family sedan were the other finalists.

  • 2007 winner: Saturn Aura

    WIECK/GM  /  AP

    General Motors showed that it was serious about the U.S. car market with the lavishly appointed Saturn Aura. Although the brand didn’t survive GM’s subsequent bankruptcy, the Aura signaled that GM had the ability to produce superior cars, and not just trucks and SUVs. The 2007 runners-up were the Honda’s return to the subcompact segment with the Fit and Toyota’s top-selling Camry family sedan.

  • 2006 winner: Honda Civic

    Honda

    Although the new Honda Civic debuting at this year’s Detroit auto show promises to be more exciting, the outgoing model had the poise, performance and efficiency to win 2006 North American Car of the Year. The Civic features a broad model lineup, including coupe and sedan body styles and hybrid, gasoline and natural gas powertrains. Runners-up that year were the not-quite-great ’06 Ford Fusion (the improved ’10 model won the award in hybrid form) and the Pontiac Solstice sports car.

  • 2005 winner: Chrysler 300

    Chrysler  /  Chrysler

    Muscular, almost menacing styling, Hemi V8-powered vroom and Mercedes-Benz-based underpinnings made the Chrysler 300 popular with celebrities, consumers and with North American Car of the Year jurors. They chose the 300 over the Chevrolet Corvette and Ford Mustang, making 2005 a celebration of American muscle.

  • 2004 winner: Toyota Prius

    Justin Sullivan  /  Getty Images

    The second-generation Prius marked the car’s growth from tinny plaything for greenies to a real car with broad appeal to a cross-section of consumers, thanks to its increased power, space, and efficiency. Hatchback lovers were also glad to see the practical body style appear in an appealing vehicle. The Prius won over a couple motor-journalist favorites that consumers snapped up by the hundreds, the Cadillac XLR and Mazda RX-8 sports cars.

  • 2003 winner: Mini Cooper

    AP

    If you packed fun in a box and bolted wheels on the bottom, you’d have the Mini Cooper. North American Car of the Year jurors and consumers both found the Mini irresistible thanks to its responsive handling, fuel efficiency and ease of parking in crowded urban streets. It prevailed over essentially two versions of the same car, the four-seat Infiniti G35 Coupe and the two-seat Nissan 350Z.

  • 2002 winner: Nissan Altima

    Mike Ditz  /  Nissan

    Nissan shrugged off its also-ran status in 2002, introducing a new, larger and more competitive Altima family sedan to challenge to reigning duopoly of Honda Accord and Toyota Camry. Altima’s success showed consumers were still willing to shop at other dealers, presaging the later success of mainstream sedans by Chevrolet, Ford and Hyundai. Runners-up in 2002 were the Cadillac CTS, which showed GM’s earliest efforts at regaining relevance and the short-lived Ford Thunderbird, which signaled the beginning of the end of the retro fad.

  • 2001 winner: Chrysler PT Cruiser

    David Zalubowski  /  AP file

    The PT Cruiser marked the apogee of the retro “heritage” car trend, and it did so for the right reasons. The car was memorably styled, immensely practical, fun, efficient and — this is unusual for such a popular car — affordable. The PT Cruiser was an unqualified home run for Chrysler, but subsequent retro models would never quite capture the zeitgeist the way the PT Cruiser did. Even during the SUV boom, the green movement was laying the groundwork for a return, and the first hybrids sold in the U.S., the Honda Insight and Toyota Prius were the other 2001 finalists.

  • 2000 winner: Ford Focus

    Ford Motor Company  /  Ford Motor Company

    Ford’s current One Ford strategy is only the latest incarnation of the company’s repeated attempts to develop models it can sell all over the world. When the European-developed Focus replaced the long-overdue-for-retirement Escort (which itself debuted at a world car when it replaced the Pinto) in 2000 critics cheered its superior combination of small car practicality, handling and efficiency in a crisply styled package. Speaking of styling, few had ever seen the likes of the audacious Audi TT, which was a finalist, along with Ford’s Lincoln LS, which borrowed hardware from global subsidiary Jaguar.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.65%
$30K home equity loan FICO 4.97%
$75K home equity loan FICO 4.33%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 11.09%
11.09%
Cash Back Cards 16.44%
16.42%
Rewards Cards 16.04%
16.04%
Source: Bankrate.com