RANTS #432

February 13, 2008

Dodge Challenger or no, time is running out for the “new” Chrysler.

By Peter M. De Lorenzo

Detroit. "We're going to be the best damn little car company in America," so said Jim Press this week after Chrysler honcho “Minimum Bob” Nardelli decided that they had better get “right sized” for the realities of its business by reducing its model offerings (and cutting slow sellers) by 50 percent and most important, by trying to rein-in its dealer count by about the same amount through consolidation. And although a percentage was never given, it’s clear they’re looking to drastically reduce the number of its dealers (is 50 percent out of the question? Not when they’re suggesting reducing dealer totals by two-thirds in some major cities).

The difference between Chrysler getting right-sized this week as opposed to what I wrote about GM last week? It’s fundamental: Chrysler doesn’t have the product portfolio that GM does. GM’s problem is that it too often doesn’t know when to say “enough” to its divisions and dealers while trying to sensibly juggle its newly-desirable product offerings/architectures across its eight divisions. (Admittedly, that’s at least demonstrably better than GM’s bad old days when it spread mediocrity out among all of the divisions and into the market).

Chrysler, on the other hand, doesn’t have that problem. Not even close, as a matter of fact. Chrysler is threatening to slip off of consumer radar screens altogether before it can muster desperately needed new mainstream products to market, because consumers are finding it difficult to come up with any reasons to care about Chrysler one way or the other – “New Day” or no.

The new Dodge Challenger? Of course, it’s an excellent piece, but is it going to save or even move the needle for Chrysler? Not a chance. Nardelli says people who come into buy Challengers are going to look at and consider other Dodge offerings while they’re there. Hmm...that may have been true back in the old days of this business but no longer. When Chrysler showed the original Viper concept at that Detroit show years ago, the juxtaposition between it and the company’s K-car offerings was indeed dramatic and unexpected. That Viper did wonders for the company back then because it indicated emphatically that this was a brand-new Chrysler.

Today? The people who come into Dodge showrooms to pick up their new Challengers are going to be doing a grab and run, because there is simply no reason to linger there. That has been the nature of this business for quite a while now. People cherry-pick the latest, hottest and newest flavor-of-the-month in the market – from whichever manufacturer it originates and with zero thought given to brand loyalty – and the Challenger will just be the most high-visibility example of that when it finally hits showrooms.

And to make matters worse, the buyers coming into Dodge showrooms to pick up their new Challengers do not represent the future for Chrysler, either. These will be decidedly older-skewing buyers who like big booming V8s and rear-wheel-drive (product attributes that we’re fond of around here, to say the least – ed.), and they couldn’t care less about Chrysler’s future viability under Cerberus’ stewardship - or anything else about the company either. These are buyers who want what they want when they want it, even if it means paying thousands over sticker for their instant auto-gratification.

But beyond the new Challenger, Chrysler is in deep trouble. They can’t get enough consumers to say “yes” to their other new products – let alone raise their hands indicating a modicum of interest - and it’s now faced with a rapidly shrinking business model, a serious cash flow problem, and a whole raft of other issues that are coming to a head, none of which they are even remotely prepared for – even despite their (ahem) “all-star” executive leadership lineup.

Needless to say, Cerberus couldn’t have picked a more inopportune time to decide to get in the car business. Even though their track record bristles with a monstrously successful batting average in past forays into ventures great and small, nothing, and I mean nothing prepared them for the auto business – especially this most particularly chaotic time in automotive history. And whatever made Chrysler attractive to Cerberus in the first place has long since been forgotten in the litany of troubles piling up, and the dire structural and financial maneuverings deemed necessary to keep the whole enterprise afloat.

The Press comment about becoming “...the best damn little car company in America” was cute and made for good media play, but the fact of the matter remains that all of their internal structural moves combined with their alleged new product offensive and their desperate plea to their dealers for help in wrangling their “right sizing” will not happen soon enough and will not keep them from falling into the Abyss.

With “little” being the operative word here, all of the Nardelli-Press maneuvering will prove to be too little, too late as time and destiny conspire to hasten the day when Cerberus is forced to do a deal with another automotive entity just to save face.

And as I've been saying all along, in order to do that the Cerberus exit strategy will involve selling out to Carlos Ghosn and his Renault-Nissan conglomerate. It may be called an “alliance” or “partnership” at first, but don’t kid yourselves. Once Ghosn gets his hands on Chrysler, Cerberus will walk away – for good. And about that idea of saving face? The bottom line is that Cerberus blew the opportunity for that the moment they entered into the agreement to buy Chrysler in the first place.

Thanks for listening, see you next Wednesday.