Chrysler Vice-Chairman, President Jim Press Tells It Like It Is
On
September 6, 2007, Toyota Motor North America President Jim Press jumped
to Chrysler shocking the automotive world and, a year later, he's still loving
it. Press told a large gathering of the Motor Press Guild in Los Angeles that,
"it's like being back at grade school." After 37 years at Toyota, Press says,
"it was an opportunity to transition from a sunset to sunrise - a chance to
redefine an auto company." And, from what he told us, Chrysler is well on their
way to being "an economic rebirth of a company."
Cerberus
Capital Management, L.P. is the private equity firm that bought Chrysler from
Daimler AG, Mercedes-Benz parent company, and Press explained that the "Detroit
paradigm of the more cars you make, the more money you lose" had to change when
Chrysler became a private company. Press said that, "Daimler was building a 5
million car-per-year company, spending money as a 4 million car-per-year
company but the problem is that the revenue to pay for it is 2.5 million cars-per-year."
Press said that Chrysler also had to adjust for Daimler's pre-sale "pump up the
volume" move which boosted "fleet sales for daily rental cars to almost 40% of
their business, hurting residuals."
Press
explained that Chrysler had to "substantially reduce overhead and billions of
fixed expenses" by cutting out a lot of fleet volume and unprofitable models
like the Pacifica, Crossfire, Magnum and PT Cruiser convertible to stabilize
costs. "Warranty costs are down 29%." Press said that, "this year's volume will
fall short, though within 7,000 units of forecast" and that they "financially
achieved their target in the first 6 months of 2008" and clarified that, "I
didn't say we were profitable."
"You
can't have brands competing a block away", Press referring to Chrysler and
Dodge brand vehicles, such as the minivan, that compete against each other. "It
costs $100 million to introduce a new product and you've got a two car race
with both on the same team."
A
stark contrast from Toyota's approximately 1,300 U.S. dealers is that Chrysler
has almost triple that and sold fewer cars last year which Press recognizes,
"you don't need 3,500 dealers for 2.5 million volume". In 2007, Toyota sold
over 2.6 million vehicles vs. Chrysler's nearly 2.1 million. That is changing with
Project Genesis. According to Press, Chrysler is helping dealers with their
"estate planning" giving them financial tools to possibly combine operations or
maximize use of their real estate, saying "we must help dealers exit before the
free market does."
It's
not all cutbacks at Chrysler, Press says that they are "spending $3 billion on
new products including the Phoenix engines" that we'll see in 2010. Chrysler's goal is to make vehicles
with, "value, appeal, quality and efficiency."
Press
says, "the timing is good" for the new Ram. "A lot of people need trucks" - "Trucks
and SUVs are about 2 million which is enough (of a market) for us and the truck
market has rebounded." Press says to expect diesel and hybrid Rams over the next few years.
Looking
ahead, Press said Chrysler has only six-tenths of its business outside the U.S.
so "the Chinese market is huge for us and we are pursuing Russia". At the
Geneva Auto Show in March, Press outlined their expansion goals for Europe. He
said alliances are important, citing "Nissan is building a B segment car for us
and Chrysler is using excess capacity to build the Titan truck for them."
Chrysler is working on electric vehicles with a preference for batteries over
fuel cells. Press says this year and next will tough for the industry with the
housing market and $4 gas and expects to see recovery from 2009 into 2010.
I've
known Jim Press for many years and he does have a passion and optimism for the car business,
"I love this as my hobby - it's a great second career and I want to share
things I've seen work elsewhere."
"Our
company can be the best little car company in America" - Jim Press - Sept. 2, 2008.
On
September 6, 2007, Toyota Motor North America President Jim Press jumped
to Chrysler shocking the automotive world and, a year later, he's still loving
it. Press told a large gathering of the Motor Press Guild in Los Angeles that,
"it's like being back at grade school." After 37 years at Toyota, Press says,
"it was an opportunity to transition from a sunset to sunrise - a chance to
redefine an auto company." And, from what he told us, Chrysler is well on their
way to being "an economic rebirth of a company."
A
stark contrast from Toyota's approximately 1,300 U.S. dealers is that Chrysler
has almost triple that and sold fewer cars last year which Press recognizes,
"you don't need 3,500 dealers for 2.5 million volume". In 2007, Toyota sold
over 2.6 million vehicles vs. Chrysler's nearly 2.1 million. That is changing with
Project Genesis. According to Press, Chrysler is helping dealers with their
"estate planning" giving them financial tools to possibly combine operations or
maximize use of their real estate, saying "we must help dealers exit before the
free market does." 
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