Auto Industry

Chrysler retools image with new models

Zetsche: 'We want to break moulds'

By GREG KEENAN
AUTO INDUSTRY REPORTER
Tuesday, November 18, 2003 - Page B1

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DETROIT -- The Chrysler group is going on the offensive after three years of focusing on cost cutting and productivity, Dieter Zetsche, president of the auto maker, declared yesterday as he and company executives unveiled eight new vehicles for the 2004 and 2005 model years.

The new vehicles, including key passenger car models to be made at a plant in Brampton, Ont., should help the embattled division of DaimlerChrysler AG reduce its dependence on profit-sapping incentives and regain some market share, Mr. Zetsche said.

The new Chrysler products will stand out from competitors with greater horsepower and better features, Mr. Zetsche said.

"We are not intending to produce or sell commodities or appliances," he told reporters in Detroit. "We want to break moulds and defy convention."

The new vehicles -- including two new rear-wheel-drive, mid-sized cars that will be assembled in Brampton, a new Grand Cherokee premium sport utility vehicle and a new version of the company's popular minivans that was kept under wraps yesterday -- represent 35 per cent of Chrysler's production volume next year and 60 per cent annually thereafter.

Chrysler will unveil 25 new vehicles in the next 36 months, Mr. Zetsche said, which will provide a good start toward increasing the company's sales volume by one million annually late in the decade. He insisted yesterday that the one million figure -- which represents about a 50-per-cent increase on current annual sales levels was not a firm goal, but "a direction we want to take."

Industry analysts and sources expressed doubts that the flood of new products from Chrysler will achieve what Mr. Zetsche and his team hope.

For one thing, other auto makers are not exactly standing still.

General Motors Corp., for one, has said it will outdo Chrysler in the next year with 22 new or redesigned vehicles.

And auto makers need to keep introducing new vehicles continuously or they fall behind.

"You've got to have very good product today just to stay in the game," said veteran industry observer David Cole, who heads the Center for Automotive Research in Ann Arbor, Mich.

"We're into an accelerated, almost frenzied pace of the industry right now. It's a dog-eat-dog, survival-of-the-fittest, clash-of-the-titans world."

Chrysler's strength in the 1980s and 1990s was in creating new segments such as minivans and mid-sized sport utility vehicles and dominating them for years, Mr. Cole said.

"Even if they did create something special, it's not going to be long before half a dozen guys are sitting there as well."

One senior industry executive said Chrysler needs a strong mid-sized car to compete with the Accord from Honda Motor Co. Ltd. and the Camry from Toyota Motor Corp., plus an array of products in that segment from GM.

"They haven't come up with a suitable mid-sized sedan," said this official, who also expressed skepticism about the other new vehicles and the plan to move the Chrysler brand upscale in image and consumer perception.

"In every single case, they don't have a home run -- except maybe the new Durango because they priced it right," the source said. "The rest of them are really, really risky."

Durango, a full-sized SUV, was launched last week and has a base price of $25,565 (U.S.), $2,000 less than the old version of the vehicle.

But perhaps the most important new vehicle was the one not shown, the new version of the company's minivans, which is crucial to the company's hopes of restoring profits and reducing incentives.

They will reach the market in March, one Canadian dealer said, which gives the company a bit of a marketing headache, because dealers will be selling leftover 2003 models, a brief run of 2004 models and the new 2005 models.

The minivans Caravan and Town and Country have been replaced by the Ram pickup as the best-selling vehicles in the Chrysler lineup, but more importantly, they have been surpassed by three minivans from Japan-based auto makers in terms of features.

The Odyssey from Honda, Quest from Nissan Motor Co. Ltd. and Sienna from Toyota are all regarded as offering better features than Chrysler's products, which dominated the minivan segment for more than 15 years.

The new interior scheme, which Chrysler's minivan seat supplier Intier Automotive Inc. played a key role in developing, industry sources said, should help Chrysler jump ahead of Honda and Toyota, at least temporarily.

Honda was the first to offer fold-into-the-floor third-row seats. The new Quest comes closest to offering two rows of fold-down seats.

The minivans are a key product because that segment is still one of the largest in North America, and Chrysler has two plants dedicated to building the vehicles, including a three-shift operation in Windsor, Ont., that employs 5,600 people.

The Canadian dealer said it will take Chrysler five years at least to reposition itself as a premium brand.

Mr. Zetsche offered no timetable yesterday for moving Chrysler upscale, but said it depends on consistently improving quality and offering premium features.

When buyers have accepted that an auto maker is doing that, he said, it becomes possible to charge a price premium and thus increase profits.

But he insisted that Chrysler vehicles will remain affordable.








Top 10 New Cars
1.  Honda Accord
2.  Acura TL
3.  Audi A4
4.  Mercedes-Benz C-Class
5.  Volkswagen Jetta
6.  Honda Civic
7.  Toyota Camry
8.  Toyota Corolla
9.  Nissan Altima
10.  Nissan Maxima

Note: Based on the number of visitors

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