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Automotive Industry

A Letter to Dieter

Automotive Industries, March, 2001

Dear Mr. Zetsche:

First, on behalf of the entire staff at Automotive Industries, welcome to the good-ol' U.S. of A.

Second, by the time you read this letter you will have already announced the reorganization of Chrysler Division. So I'm sorry we didn't have the chance to chat before you went too far down that road. But if Chrysler is like any other OEM, the reorganization is a "work-in-progress" anyway. So here's what I think.

I think you're making all the right moves by cutting production and eliminating headcount, but what you really need to do is eliminate all current models from Chrysler's portfolio. This, in itself, would be a tremendous cost savings if you did nothing else. But that's not practical because the company has unions, dealers, employees and shareholders who still think Chrysler builds good cars and trucks, and they wouldn't want to see it stop.

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The truth is Chrysler has been the styling leader in North America thanks to Tom Gale and John Herlitz, but they're both gone. Chrysler has quality problems that hurt its value perception, and that is really what is driving its costly incentive program -- that and over production. But if customers really believed these vehicles were worth the sticker price, they'd pay it. But they don't.

On the other hand, your company possesses the Crown Jewels of the auto industry: Viper, Prowler and PT Cruiser. When was the last time Chrysler offered an incentive on one of these gems? This tells me that low-volume, high-quality heart-stoppers sell for a premium. Look at the success of the VW Beetle and the reaction to Ford's Thunderbird. It speaks volumes about what customers want.

So, here's what I'd do, were I you. I'd focus on niche products and let Ford, GM, Toyota and the rest have the mass car and SUV market.

Viper, Prowler and PT are a great start. But Chrysler needs to take the same passion to other market segments. Chrysler's pickup trucks, for example, should look like the old Powerwagons, with big wheel wells, oversized tires and a grill that would stop a rhino. Durango should look like something the Desert Fox would use to run the dunes of North Africa Chrysler trucks and SUVs should be bigger, stronger, bolder and more powerful than anything else on the market.

Naturally Chrysler has to deal with CAFE requirements, so to offset the fuel consumption of these monster trucks it needs a good-looking eco-hybrid that can go from Detroit to L.A. on a few tanks of gas. But this shouldn't look like a typical, ugly "green" machine. It should have real function and appeal -- like the Chrysler Turbine car of the early 1960s.

Of course, you can't ignore Chrysler's domination of the minivan market. But take a long look at the new VW Microbus: retro in styling, contemporary in everything else. I think they'll sell all they can make, with no costly incentives attached.

We have now pared Chrysler down to seven vehicles, with tremendous niche market appeal. Let Mercedes cover the luxo-end of the market Chrysler Division should concentrate on quality, focus on the customer, build real brand enthusiasm and stop offering incentives on vehicles that compete with every other car in the market.

Chrysler's new minivan should be the most functional one on the market Who needs them the 'most- young moms, right? These soccer moms haul kids all day long. So these new mom-mobiles should be kid-proof: child safety seats, vinyl, upholstery, sealed instrument panels, rubber floors, plastic headliners -washable inside and out.

So, what do you think?

P.S. Oh yeah, lighten up on suppliers.

ANDREW CUMMINS

Andrew Cummins is Publisher

Automotive Industry

A Letter to Dieter

Automotive Industries, March, 2001

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