Karl on Cars

GM Climbing...Chrysler in a Tailspin?

You may have heard this already, but Chrysler recently sacked its Sales and Marketing Vice President, Joe Eberhardt. The level of unsold Chrysler inventory sitting on dealer lots is threatening to alter tectonic plate activity under the North American continent, and some -- okay, I -- have suggested Chrysler simply "give 2007 a miss" in terms of model production. They could literally just let the 2006 leftovers cover sales for a few more weeks, and then start producing 2008s in January. They are already taking this approach with a few models, including the Viper...

Not so long ago Chyrsler was looking like the fair-haired child (Hemi mania, Chrysler 300 sales records, etc.), but it seems the world has turned once again. Now GM has a slew of new (and impressive) vehicles hitting the market while Chrysler dumps the Caliber, Compass and Sebring on us.

Never a dull moment when it comes to our Domestic Automakers.

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21 Comments

Pinning their small/midsized platforms on Mitsubishi, who had a vehicle defect coverup scandal, was not a smart move. Neither is paying $1.9bil for that priviledge and 5 years later selling out for $800mil less. And having that selloff occur right around the time gas prices spike is pretty bad luck as well.
 
Ford has Mazda, Volvo and Ford UK for their FWD platforms. GM has Opel and Daihatsu. Where will DCX get theirs from next?

There was a good crowd at the Chrysler section of the just ended LA AUTO SHOW, including many checking out the Caliber and Compass.
But most of the crowds were around the Viper and othe Chrysler performance cars.
 
Perhaps now that fuel prices have stablized at a lower level than last Summer's, Hemi Mania will resurface?

The drama seemingly never stops for Chrysler. For GM, it looks like they are going to be on a long uphill climb.
 
To get in this situation, Chrysler needed to a)distract itself from great design, b) make a lot of redundant models, c) Price and equip all of those models the same, d) overproduce and make a lot of strippers, to worsen the situation, e) repeat across entire lineup, f) dump it all into fleet or hold huge fire sales to get rid of it, making their models hold their value even worse, and making the product even less desirable, and finally, g) sell to anybody, give 0% and a rebate to any customer, including those with bad credit histories, and if you can't get them to buy, give them a lease deal they can't refuse.
 
For GM on the other hand, it's match supply with demand, and to get more demand, build better and more desirable cars. So, they cut fleet, cut incentives, cut factories, and people, slowed factories, etc. They took their brands and have aligned them into niches. They have (or will) poured new product (vastly improved, and world-class new platforms, interiors, powertrains, exterior designs).
 
Manufacturing efficiency + quality (vastly improved, better than Toyota in recalls this year), plus much-improved product, a lot less badgeneering, and a better warranty= a company that is on the way up and will improve sales. Chrysler is the exact opposite, a company that is mortgaging its future for more profits now (or at least more paper profits). No wonder shareholders are rebelling at DCX and demanding the spinoff of Chrysler Group. Nothing really ever changed there, did it?

A co-worker and I recently noticed a trend with DCX. It includes the vast number of hatchback/wagon/crossovers that the company has released within the last year or two.
 
Count them: Caliber, Compass, Patriot, Sebring hatch, Magnum, Pacifica, Nitro, I believe the Avenger will be available in hatch form (?), and finally the Jeep Unlimited. Does this strike anyone else as odd? I thought DCX was crazy to begin with for getting rid of their conventional small car (Neon) and replacing it with the higher-ground-clearance, hatchback-only Caliber. It seems like they're milking the "crossover/utility" market too much. You know what they say about putting all your eggs in one basket...
 
What's everyone else think?

I think the Sebring isnt a hatchback for one.
 
Chrysler has been in trouble for a while. I said this a while ago on Karl's old forum but I was told by numerous people that GM was the one who was lost and Chrysler was "hot" due to the RWD vehicles and its commitment to bold design. My argument then was that it would take more than the LX platform to save Chrysler and I didn't see how they were using the success of that platform was carrying over to other vehicles. Dumping their small car was ridiculous but I knew Chrysler was in trouble when I read a quote saying "we cant out Japanese the Japanese when it comes to small cars so we are going in a different direction". I could not believe an exec would make such a statement. Basically he said they can possibly build a small car that can compete so they went with the Caliber instead. As much as the media loves to hate the Cobalt it is a decent small car and the best domestic small car on the market. It's also superior to the Lancer and at least equal to the Elantra and Corolla. GM launched a solid, if not class dominating, small car while Chrysler decided to abandon the market just before fuel prices went sky high. Makes no sense.
 
I contended all along that Chrysler really needed to be worried about a competent midsize sedan since thats where the big sales are and they respond with the Sebring. It's got a lot of features but its small and odd looking which is going to hurt its chances for success. GM has half dozen midsize cars and thus can do different things with each one. Chrysler only has two and it was critical that they make them excellent in order to have the type of success the 300 enjoyed for two years or so. It appears that isnt going to happen unless the Avenger is much better. On top of that they launched a ton of SUVs (although most are small) for 2007 when the market for those is not expanding. To compound that they are behind GM and Ford on hybrids and have only announced one hybrid model that I know of and it wont be here until 2008.
 
Another issue is their interior design and quality. I rank them 3rd out of the Big 3 and on par with Nissan or Hyundai in that department. I have not been impressed with any of their recent interiors, they are all angular, dark and boring.

Oh, I don't know Karl. I'd say that the Caliber, Compass and Sebring are all pretty much dull moments...

I saw Caliber at SF auto-show and it looked like a cute, convenient car with lot of smart features and utility. I do not know how it drives but unlike other cars there was some crowd around it checking it out from practical point of view. Dodge Nitro also looks kind of cute. The only thing that I did not like about Chrysler was Sebring.
 
I wonder why Chrysler relies on Mitsubishi to develop FWD cars. They do not have engineers? How it can be in car manufacturing company having size of Chrysler?

1487,
 
You're right. The Sebring isn't a hatch. I was almost positive that it was available as a hatch, but I'm wrong. It definitely looks like one though, and plenty of reviews comment on that. My point about DCX's current offerings still stands however.
 
There's nothing in the Chrysler name lineup that I would ever even think about owning. Chrysler has been lucky thus far, but I think anyone who thinks they're safe from harm is a fool. They're not as bad off as FoMoCo right now and they're not to the point that GM was 6months to a year ago, but they are, indeed, spiralling down.
 
I think the key to DCX's success is to design radically styled cars with individual personality and a wide variety of engine options. They don't do well with conservative styling. That's why I think cars like the Dura... I mean Aspen will be failures.
 
Successes: Charger (even with the V6), Magum, 300C, Caliber (despite the hatch-only), the upcoming Challenger, and the Nitro seems poised to be successful on style alone.
 
Failures: Aspen (nothing is going to get people to buy a glorified Durango), Pacifica (wracked with mechanical problems galore), Compass/Patriot (seems like overkill on this platform), Crossfire (wracked with problems and overpriced for a M-B rebadge).
 
They can't rely on the Caliber for sales long-term. I see these things everywhere, but the appeal will die off in a year or so if not a few months. They're going to need a more conventional small car to fill that gap. I wouldn't be surprised to see it gone in a few years.

Perhaps Daimer-Chrysler's euro parentage sees hatches in a different light than other domestics. A pity the hatches weren't more refined before their release.

Right now the Wizard of Oz is on TV and it is far more believable that the following paragraph
 
"As much as the media loves to hate the Cobalt it is a decent small car and the best domestic small car on the market. It's also superior to the Lancer and at least equal to the Elantra and Corolla. GM launched a solid, if not class dominating, small car while Chrysler decided to abandon the market just before fuel prices went sky high. Makes no sense. "
 
The media unfavorably reviews the Crapbolt for the simple fact that the Crapbolt is an unpleasant vehicle.
Ford Focus is a much better car than the Cobalt and it is an older design. Between the Caliber and the Cobalt I call it a tie for last place.
The Crapbolt does not measure up to the Corolla, Elantra or Lancer it would be a farce to say that is does.
 
Chrysler will be fine.
 
Jeep is a very strong brand. Wrangler is selling well. Patriot looks decent. Redesigned Liberty is just around the corner.
Jettison the Compass as it is not needed and is poorly executed. Could have fit in as a Chrysler, not as a Jeep.
 
300, Charger, Magnum are very good. Update and improve the interior materials and offer the diesels that are sold in the export models.
 
Compass has done well despite the low grade interior materials and fit and finish. Improve the interior and it will be fine.
 
I believe Chrysler has partner to manufacture the Hornet soon so it is wait and see how it turns out.
 
Chrysler is a leader in minivans and they will have a slight increase in plant utilization when they start making VW's van. Also, a redesign is just around the corner. And GM and Ford are giving up on minivans.
 
Pacifica is a problem. Chrysler is asleep at the wheel on crossovers.
 
PT Cruiser is doing well despite increased competion from the HR.
 
Trucks are a problem area with GM, Ford and Toyota all having newer, better designs either already introduced or appearing soon.
When is the Ram being redesigned? Dakota needs a redesign. Raider is not selling at all.
 
Sprinter is a huge success and a new one is here very soon.
 
Sebring is a disappointment.
 
Challenger is exciting.
 
Overall, Chrysler screwed up big time by not slowing production to meet demand. At least they do not have 4 different plants making the 300, or Caliber, or Durango.
 
Should Chrysler just start making 2008's in January?
 
In general, I find the entire model year shenanigans without merit. It it is made in 2006 it should be a 2006. If it is made on January 2, 2007 then it should be a 2007.
VW extended it's Jetta TDI 2006 production to allow it sell the 2006's in 2007 and still fall under the 2006 MY regulations. VW even ships the late 2006 TDI's with 2007 owners manuals.

Hatch is actually the best form of small car. I cannot imagine why someone may need small sedan.

The comments on the Caliber (and the Nitro) looking "cool" and thus selling well (initially at least) are true. The crowd at the auto show mirrors my wife's reaction when I drove one home. She came out and was like, "Ohh, what's this?" in an excited tone. Of course, by then I'd driven the thing 50 miles and immediately said, "Stop right now. This is not a good vehicle. Don't let the book's cover fool you."
 
But not every one will have an automotive journalist spouse to warn them off, and looks alone can bring it a lot of sales...initially.
 
We'll see how the Caliber is selling next year. And even if it's selling well I think we're all smart enough to not equate good sales to good cars. If that's the case, Ferrari's are the worst vehicles on the planet and F-150s are the best.

It also has to do with the consistency or lack thereof in Chryslers designs. The 300 and Charger were great when they debuted and people thought that DCX was going uphill. Instead of thoughtfully and carefully playing of the success of the LX twins we got mediorcre cars at best with another generation of low grade interiors, no innovation, old/outclassed powertrains, and little to no refinement. The new Sebring/Avenger try to have styling cues of thier bigger brothers but they look HIDEOUS, unpropotioned, and cheap. Another generation for fleet sales.
 
GM is making drastic moves in design, quality, performance, build quality (excluding Solstice/Sky) and dare I say refinement. Im actually quite suprised that they did this much in so short of time. Ford is S L O W L Y getting there. The Fusion is decent, it could be much better with higher grade of materials and better/more powerful/efficient engines.
 
The Edge design is nice but its porky and its interior is so so. The Expeditions are pretty nice but behind in power and have higher fuel consumption than the larger more powerful offerings from GM, Dodge, and soon to be Toyota. The Focus is outdated and easily outclassed, they let a a decent car just die slowly of aold age, but Ford seems to be good at this. When will they learn you have to keep the product FRESH?

If you really think about it, aside from the Ram in '02, Chrysler's only truly successful launch has been the LXs. Everything else has either won sales or critical acclaim, but not both, and the number that have won the latter is small. Meanwhile, they've introduced a number of sure-fire flubs: the Commander, the Crossfire (and do NOT blame Celine Dion for that one), the Comapss, the Sebring/Stratus (the old ones and the current ones), the Dakota, the Durango, the Grand Cherokee, the minivans...just about everything. Nothing's been as widely regarded as those designs from the early and mid-90s. Nothing's been as competitive as those cars, either.
 
Ford's a little better, if you ask me. Even their flubs were respectable cars that might have sold...if Ford had had a better engine sitting on the shelf when they were released.
 
GM's much better.

savetheland,
 
I'll agree that a hatch offers the best qualities in a small car. Take Edmunds test on the sport compact roundup. I think the biggest reason the Civic Si didnt rank higher than 3rd is because it's only a coupe. The WRX is a sedan and the Speed3 is a 5-door, which both offer heaps more practicality than the Civic.
 
The thing is, is that people want diversity in their cars. Not everyone enjoys hatchbacks, especially the looks of them. A lot prefer sedans because they either don't need that much practicality or they like the styling better. A lot like coupes too because they're sportier looking. Not everyone wants the same exact styling and practicality in a car.
 
On a side note, I just got done reading an Autoweek article on the new Saturn Astra. Apparently it's only going to be available in 3-door- and 5-door-hatch form. Big mistake by GM. I think the car will sell, but it looks like they're following suit with the Caliber. They better plan on offering coupe and sedan models not long after it debuts or it's going to tank just like the Caliber will in a year.

I checked out the Magnum at the Detroit show last year and thought that interior came straight out of 1991. I was disappointed because I thought it was pretty cool on the outside. I ended up buying an '06 Impala that is about ten years ahead of Chrysler in refinement. My only beef with the Impala is no six speed like the new Saturn.
  Wait until next year and you start to see results from the new siverado/GMC kicking in to their bottom line. I don't know how Ford is going to get out of their hole when GM is starting to put a strangle hold on the large suv and pickup market. Ford will have to sell ten Fusions to make up for the loss of $5,000 worth of incentives on F-150, and thats not going to change next year even after the new GM trucks start to cool down. Even if GM has to offer $2,000 incentives to move Silverados in July next year Ford still going to be stuck putting heavy incentives on their trucks.
  One thing people are forgetting about the new Tundra is that the average domestic pickup buyer couldn't be forced into a foreign dealership with a gun to his head. The same loyalty that certain buyers have for foreign cars is the same loyalty that certain buyers have for domestic pickups. Toyota built a decent truck but it will not be enough to lure away domestic owners just as the new Saturn Aura is going to have trouble luring Import buyers. You have to raise the bar twice as high to get conquest buyers from either side of the fence.

flicmod,
 
I dont think the Astra is a mistake at all. They dont want a Saturn Cobalt so they are doing something different. Chevy has two small sedans and the Astra is European so it makes sense to offer hatches since that is what sells over there. They are only talking about 40k sales a year which is what the Cobalt does in 3 months or so. I'm pretty sure they can sell 40k hatches in a year.
 
mopar,
 
I dont see why liking Chrysler has to mean you formulate absurd characterizations of GM vehicles. I can admit that Chrysler has some competitive vehicles like the 300 and Charger but you seem to be incapable of making similar statements about GM products. The Cobalt did not get universally panned by the media as you claim. Do some research and find reviews from 2004. C&D was very impressed with the Cobalt in their road test and lauded it's refinement. I have yet to read a review commenting on the refinement of the Caliber. The Cobalt has been critized for being too conservative and unsporty in base form and yet the Corolla has been a huge hit while being nothing more than conservative, reliably transportation. Unlike the Corolla, the Cobalt offers two SS models that are considerably sportier than the base model. The car is pretty boring looking but in terms of engine performance, space, features, refinement, etc. it is competitive with the majority of the small cars out there. Calling the car stupid names like "crapbolt" doesn't really do much to prove your point.A ll that proves is that you dont have any real logic to back up your "Cobalt sucks!" argument. I would love to know how the Cobalt doesn't measure up to the small cars you mentioned.
 
Chrysler needs to move aggressively into small cars and hybrids ASAP if they want to turn around. They also need to realize that not every vehicle in their lineup needs to be polarizing. The media criticizes cars like the Impala for being bland but when you look at the sales of that car you realize there is a reason why GM doesnt listen to everything the media says. The best selling family car in the country wast remotely a looker until the '07 model and yet no one cared. Chrysler needs to come out with some conservative, yet attractive designs like the Camry or Aura because not everyone wants "bold" styling.
 
I think the Caliber could remain a strong seller if they add a hybrid model and upgrade the interior over the years. Better mileage on the up level engine wouldn't hurt either. I think it gets 26mpg on the highway which is pathetic for a 4 cylinder.

Mopar,
 
I responded to your comments in the Camry forum as well. Ditto for flicmod. I think all your concerns were addressed by my latest post.

moparbad,
Get your head out of the clouds. The first part of your comment is way off.
 

One would think that being partners with a successful auto company such as Mercedes-Benz, that Chrysler would do extremely well. But it seems that one hand doesn't know what the other is doing...

lemon- My comment is credible. Stating the Cobalt is at least equal to the Corolla is right out of fantasyland and as believable as a flying monkey.

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