Daunting Challenges Await Pared-Down Chrysler
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20090608-NEWS--0008-NAT-CCI-AN_-- 6/5/2009 5:43 PM Page 1 8 • JUNE 8, 2009 Fiat’s plan for Chrysler: Focus on the brands Changes could include management shifts, more product differentiation Luca Ciferri nies, like Fiat Group Automobiles.” push for more distinct product line- heads were assigned to Chrysler, Dodge [email protected] Fiat Group Automobiles encom- ups for Chrysler, Dodge and Jeep. and Jeep. Those executives reported TURIN, Italy — Fiat wants to turn passes the Fiat, Alfa Romeo, Lancia “Future products of the various to Chrysler’s global marketing chief. Chrysler into a much more brand-dri- and Fiat Professional light commer- brands should differentiate more than But the jobs were eliminated when ven company by organizing key man- cial vehicle brands, plus the Abarth what happens today because they will Chrysler shrank its white-collar work agement functions around the Chrysler, sports car brand. be sold in nearby spaces in the same force 25 percent late last year. Dodge and Jeep makes and putting ex- dealership,” a Fiat source said. Chrysler has not had vice presidents ecutives in charge of each one. The Chrysler brand relies heavily Brand CEOs He also said the product portfolio of the individual brands since early in Fiat insiders also say they want to on the Town & Country minivan. The brands are not legal entities but must be better balanced among the the DaimlerChrysler era, said Carrie see greater product differentiation have their own CEOs who run them brands. McElwee, a Chrysler spokeswoman. among the three brands. brand,” a source said. as virtually separate companies, re- “The Chrysler brand makes two- The marketing organization reports That’s how the Italian company Still, it is unclear how far Fiat CEO porting their own profit and loss thirds of its sales volumes with just to Steven Landry, executive vice pres- does it, and some version of Fiat’s Sergio Marchionne will push Chrysler statements internally. Each brand two models, the Town & Country and ident of sales, marketing and service. system would work for Chrysler, said toward imitating the brand-based or- maintains separate organizations for the 300,” the source said. “The Dodge Chrysler’s product development two senior executives who spoke on ganization he installed at Fiat Group sales, marketing, aftersales, dealer de- brand counts on a total of 13 models teams are divided into platform teams condition of anonymity. Automobiles five years ago. velopment and product planning, as between cars and light trucks.” rather than by brand. Chrysler now “We were surprised in finding at “Possibly, the new Chrysler would well as a dedicated styling team. has two platform teams: Jeep/truck Chrysler a vertical organization be a more brand-oriented, flat orga- All brands rely on the group for en- Different approach and minivans/cars/SRT. c where, under the head of every func- nization,” said another source, “but gineering, manufacturing, quality, Unlike Fiat, Chrysler has not had a tion, there is not a direct report in not yet run as a holding of brands purchasing and logistics. history of strong leaders in charge of in- Bradford Wernle contributed charge of that function for every managed as virtual operating compa- The Fiat team is also expected to dividual brands. For a while, marketing to this report he new Chrysler GMAC: Business Group LLC that Twill take over the Daunting challenges await as usual — almost good assets of the old Chrysler LLC will be David Sedgwick more different in reality pared-down Chrysler [email protected] than in name. Now that it has an adequate source of capi- A new CEO, Fiat’s tal, GMAC Financial Services is making more Sergio Marchionne, 56, Out with the old In with the new loans to General Motors’ retail customers and will command a Chrysler Ⅲ Name: Chrysler LLC Ⅲ Name: Chrysler Group LLC offering wholesale fi- with lower sales and Ⅲ Sales: 1,453,122 units in Ⅲ U.S. dealerships: 2,392* nancing to Chrysler LLC fewer of almost U.S. (2008) Ⅲ Chairman: C. Robert Kidder, retired dealers — and might everything: fewer Ⅲ Financial results (2008)* CEO of Borden Chemical even return to the leas- dealers, fewer ing business. Revenue: $48.4 billion Ⅲ CEO: Sergio Marchionne, employees, fewer And although General CEO of Fiat Group vehicle models and Net loss: $16.8 billion Motors has entered fewer plants. Ⅲ Market share: Ⅲ Other directors bankruptcy proceedings, Bankruptcy is 10.2% Alfredo Altavilla, CEO of GMAC expects to con- allowing Chrysler to (through May) Fiat Powertrain Bill Muir: duct business as usual summarily terminate Ⅲ U.S. Technologies “I’m optimistic.” with GM dealers. 789 dealerships, to say dealerships: Lou Noto, former vice “I’m optimistic,” GMAC nothing of escaping the 3,200* chairman of Exxon Mobil President Bill Muir said in an interview last automaker’s ill-fated Ⅲ Chairman Corp. U.S. plants week. ownership by Cerberus and Ⅲ Assembly plants Just six months ago GMAC was teetering on Capital Management CEO: 9 in U.S., Canada and the edge of bankruptcy as it tried — and LP. Bob NardelliMexico on Jan. 1, 2011 Marchionne failed — to gain additional capital. Now that But there’s no Nardelli** Closing are: the Obama administration has made a $7.5 guarantee that the billion investment in GMAC, operations are Ⅲ Assembly plants - St. Louis North, Fenton, Mo. (Dodge Ram — product ends Dec. 21) slimmed-down dealer returning to normal, Muir said. The compa- 12 in U.S., Canada and Mexico - Conner Avenue Assembly Plant, Detroit, closing (Dodge Viper — body actually will sell on Jan. 1, 2009 ny is: more vehicles per store. scheduled to close December 2009) Ⅲ Financing 30 to 40 percent of GM dealers’ Ⅲ Employees Marchionne — and - Sterling Heights, Mich. (Dodge Avenger, Chrysler Sebring and sales, close to the lender’s historical norm. the much-reduced Total: 55,000 Sebring convertible — product ends Dec. 31, 2010) Last November, GMAC’s retail loan volume number of surviving U.S. employees: 38,500 Ⅲ Employees was zero. executives and Union: 27,600 Total: 55,000 Ⅲ Considering a limited return to leasing late employees of Chrysler Nonunion: 10,900 U.S. employees: 38,500 this year. But GMAC would avoid subvented — face a brutal lease deals. Ⅲ U.S. nameplates Union: 27,600 challenge. Do they have Ⅲ Providing floorplanning to 1,200 Chrysler 23 in 2009 model year the resources to renew Nonunion: 10,900 Ⅲ dealers. Muir expects to accept several hun- Chrysler’s sputtering Global production: 2 million units Ⅲ Nameplates dred more in the weeks to come. (approximately) * product pipeline? 20 in 2010 model year Ⅲ Preparing to negotiate permanent floor- Do they have enough Ⅲ Ownership Ⅲ Possible Fiat and Fiat-based plan contracts with Chrysler dealers after the engineers and Cerberus Capital Management LP nameplates within 2 years The Fiat 500 will be sold in automaker emerges from bankruptcy. designers to adapt Fiat and partners: 80.1% Fiat 500 Chrysler dealerships. Ⅲ Continuing to finance the existing floor- platforms for American Daimler AG: 19.9% 6 small or mid-sized models based on Fiat platforms plans of GM dealerships that will lose their customers quickly in all franchises in 2010. “I anticipate it will be a Ⅲ Sales per dealership: 405 annually Ⅲ Global production: Company has not released projections of the small and mid- in U.S.*** very orderly and cooperative process,” Muir sized car segments? Ⅲ Ownership*** said. “We won’t do anything to precipitate *Company estimate in U.S. Bankruptcy Court filing The Fiat-Chryslers are UAW VEBA: 67.69% any rash action.” **Nardelli will resign when new company is formed. due in two years or less. Fiat: 20.0% Although GM no longer owns most of ***Congressional testimony of President Jim Press on June 3 Here’s a comparison U.S. Treasury: 9.85% GMAC, the fortunes of the two companies re- of the old Chrysler — Export Development Canada: 2.46% main intertwined. the one that crashed Last week GM CEO Fritz Henderson asked Ⅲ Sales per dealership: 640 annually (surviving dealerships at time under Daimler and the U.S. Bankruptcy Court to allow the au- of sale)* burned under Cerberus The PT Cruiser dies tomaker to conduct normal business activi- — and the new with the 2009 *Congressional testimony of President Jim Press on June 3 ties with GMAC. Chrysler, a company model **Company U.S. Bankruptcy Court filing “No alternative source of wholesale dealer with a clean post- year. ***If performance milestones are met, Fiat’s share will rise to 35%, with the right to acquire financing or retail financing is available to bankruptcy balance an additional 16% by buying shares. Fiat cannot get control of Chrysler Group LLC until the debtors to replace, at the levels re- sheet but a very outstanding debts to U.S. Treasury and Export Development Canada are paid. quired, the critical and necessary financing uncertain footing. provided by GMAC,” Henderson’s affidavit argued. — Peter Brown The court granted GM’s request. c.