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Chrysler looks to new models to lift sales

Chrysler, the US unit of German carmaker DaimlerChrysler, said on Wednesday it expected the launch of nine new products this year to lift sales in the second quarter.
/ Source: Financial Times

Chrysler, the U.S. unit of German car maker DaimlerChrysler, said on Wednesday it expected the launch of nine new products this year to lift sales in the second quarter.

The disclosure came as Dieter Zetsche, Chrysler chief executive, said he would assume the oversight of product development from Wolfgang Bernhard, out-going chief operating officer.

Chrysler is in the midst of introducing the largest number of new products in its history. Its parent hopes that this will help produce "positive earnings" this year after three years of losses, including a $48 million loss at the operating level, before restructuring costs, for 2003.

Mr. Bernhard, who starts as the new head of DaimlerChrysler's Mercedes luxury car division on May 1, said he believed the new products would provide "some lift" to Chrysler's sales in the second quarter. "I'm confident that this means Chrysler is finally taking off and getting some air under its wings," he said.

Chrysler earlier this month boosted the level of cash rebates on some of its current models after reporting a 2 percent decline in year-on-year sales for March.

Detroit's carmakers are hoping that the launch of a record number of new vehicles this year will reduce the need for margin-eroding incentives such as zero percent loans and cash rebates.

Tom LaSorda, the former head of manufacturing at Chrysler who replaces Mr. Bernhard, said he had recently set fresh targets for fixed-cost reductions. He declined to specify the targets but said: "We spread it [cost-cutting] around to make sure everyone feels the pain."

Mr. Zetsche said he would spend about a quarter of his time on product development issues, compared with "about 15 percent" previously.

Mr. Bernhard said there was a "completely different spirit" at Chrysler since he started working at the unit's Michigan headquarters more than three years ago.

Asked what had changed since the time of the merger with Daimler, Mr. Bernhard said: "At the time I came in, in November 2000, people were afraid, they were concerned, they didn't know what to expect, they were insecure about what was going on. Some of them realized we had a huge problem, some of them didn't even know; it was a mess.

"But if you look now, everybody knows that we've a much better grip on our cost side and we have nine new products coming along. So the spirit of the company is 'hey, we made it this far' and with all the new stuff coming we'll be in great shape," he said.