Replies to This Discussion

Permalink Reply by JJ Hornblass on June 2, 2009 at 7:33am

The deal has cleared bankruptcy court and Chrysler is poised to emerge under Fiat's ownership. Again the question is, what should Fiat do to fix Chrysler?

Permalink Reply by JJ Hornblass on June 10, 2009 at 11:35am

This forum deserves some consideration now that Fiat has closed on Chrysler. I'll start it off:

1. Each of the Detroit Three have suffered from long production cycles. By the time the carmaker crafts its new product set, the price of gas goes up by 40% and customer demand changes drastically. Of course, production cycles are never going to be measured in weeks at the Detroit Two/Italian One, but Fiat must do everything it can to reduce production time.

2. The perceived an actual value of Chrysler vehicles needs to improve. Financing can't be done without greater value in each vehicle. Leasing won't work. The used-car market will be limited without strong residual value in each Chrysler. Without that value, Chrysler vehicles effectively become more expensive than like models -- and that's a huge hindrance to sales, particularly when the perceived value at the start is not all that high for Chryslers. Heaven help Fiat if it has anything close to a n Audi moment in the next 24 months.

3. On the surface, Fiat might look at Chrysler Financial's subvention and check it off as a clear winner. After all, CF (and GMAC and FMCC) has invariably sparked more than one car sale over the years just by dangling an inviting loan or lease deal in front of consumers. But subvention has become the sales crunch Chrysler, GMAC and Ford can't shake. Just look at the GMAC deals coming down over the last couple of weeks. Fiat is going to have to reconstruct the Chrysler brand so that, like the non-US carmakers, subvention will not necessarily be the primary hinge upon which sales volume is dependent.

All three of these imperatives are, of course, interrelated. They can all be boiled down to build great cars people want. Everything else should take care of itself. Isn't that right, Mr. Audi?

Permalink Reply by Michael Scharf on June 22, 2009 at 1:37pm

A more immediate issue is the way that Chrysler and GM are treating current owners. I happen to own a car from one of the brands that GM has dropped (and now sold). I've received a letter stating that most of the dealerships in the area are now closed, but that they want me to buy another car - where I don't know. For warranty service, I think I'm out of luck... No nearby dealerships, the remaining ones won't return calls.

If the "new" GM and Chrysler/Fiat won't handle simple warranty service, that message will get out very quickly. No warranty, no sales, no matter what subvention programs they do.

Permalink Reply by Marcie Belles on June 22, 2009 at 2:10pm

I've heard people say the same thing about lack of dealerships, too. No dealers = no sales. Not a good formula for success.

Permalink Reply by Michael Smitka on July 7, 2009 at 3:05pm

1. Fiat needs to really work on product launches, get the bugs out in advance. Buyouts decimated Chrysler staffing across a wide array of functions, and Fiat should assume this will lead to lots of problems. It's pretty hard to audit what's been done in product engineering but they really ought to go through all existing projects carefully, looking for problematic areas (quality ....) and checking that product specs didn't go through one too many bean counter and so end up out of synch with levels competitors are offering.

2. Of course that means keeping suppliers working with Chrysler. An uphill battle there, as you have to have some sense of production volumes to be able to price parts to Chrysler, but what is a realistic number? Near zero?

3. Chrysler needs to lobby for a gas tax as though its survival depends on it. Because without high prices at the pump there will be no market for the vehicles and engineering capabilities Fiat brings to the deal.