Chrysler: Return of the Native - Brief Article

Automotive Industries,  Nov, 2000  by Ken Gross

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Mercedes-Benz is beginning to figure out how to selectively manage the Chrysler takeover and produce a stronger car company.

After the dust settled on Daimler-Benz's unabashed takeover of Chrysler, and a few high-profile executives abandoned what they thought was a badly-damaged, if not a sinking ship, pundits castigated everyone from Juergen Schrempp and Bob Eaton on down. While there are still things not working well with the new company, there are also some encouraging signs beyond the hot-selling PT Cruiser. Despite initial blunders -- many of them along national-characteristic lines -- this marriage is going to work.

I offer two exhibits in evidence: first, Tony Cervone, a 15-year Chrysler veteran who recently defected from Steve Harris' General Motors staff to run Chrysler PR; second, the announcement that the still informally named "Chrysler Group"' will build Mercedes-Benz's new rear-drive 5-speed automatic in Kokomo, Ind., for use in future Chrysler, Dodge and Jeep vehicles. The upcoming Chrysler 300N and Concorde, plus the next Dodge Intrepid and a Dodge Charger (if a spin-off of the showcar is approved) will also use the transmission -- the fist of many such cross-corporation applications.

After a disastrous start, Daimler-Benz has stopped trying to make over Chrysler in its own image. Taking a page from Ford's playbook with Jaguar, the new owners are letting Chrysler reaffirm its own identity with segmentbusting new vehicles. M-B executives acknowledge selected sharing of existing technology and components can advance Chrysler's product development quickly and economically.

"When Jim Holden became President and CEO," says Cervone, "we shifted from a company that had been completely merged, back to a separate, admittedly large-sized, business unit. Day in and day out, Chrysler is running now under Jim Holden."

Cervone stresses that Chrysler has refocused on preserving brands with "cult characteristics". He says the company DNA that made the 1990s' Chrysler so exciting (and attracted Schrempp to acquire it) still exists. And he insists there is no leadership vacuum in Auburn Hills.

"The people who left ChrysLer established the culture and they set up a system to perpetuate it," Cervone maintains. He cites Tom Gale's product design and development successors, Rich Schaum and Trevor Creed, who now have the opportunity to take things to another level.

Cervone talks as though he'd never left Chrysler. He doesn't dispute Bob Lutz's comment in last month's Automotive Industries in which Lutz claimed Chrysler's per-vehicle costs have jumped $1,500 to $2,000. And he admits that's not the only problem Chrysler must solve. "But one of Chrysler's advantages is that we can react quickly," chimes Cervone. "We don't act like a big company all the time. We have people who can ratchet right into those costs."

And Chrysler can access Mercedes' technology instead of having to develop it in-house or pay a supplier, as happened before the "merger".

Why did he return? "I felt the company's real cultural attributes were still here. I have deep roots with Chrysler (three generations of Cervones have worked there). And I had some very unexpected pangs when Jim Holden called me. The hardest thing I've ever had to do was tell Steve Harris I was going back."

In his new command, Cervone plans to communicate what he believes the Chrysler Group is: a builder of "emotionally charged, passionate vehicles that redefine market segments." He hints at an upcoming Jeep and the next Dodge Ram.

"We haven't lost our edge and we're over our merger pains," Cervone claims. "And we have management that still responds to great ideas."

Ford has proven that selective management of takeovers can maximize an investment and produce a stronger car company. MercedesBenz took a while, but perhaps they're on their way to figuring it out. I'm beginning to bet on Chrysler again.

KEN GROSS is director of the Petersen Auto Museum in Los Angeles. A former brand manager of a global consumer goods company, Ken has written extensively about automobiles for three decades.

COPYRIGHT 2000 Cahners Publishing Company
COPYRIGHT 2000 Gale Group