 |
|
« Does Multitasking Make Us Less Productive? | Main | Light Friday: The Fun Theory Effect »
November 12, 2009
A Look at Chrysler's Ambitious New 5-Year Plan
Chrysler, under the aegis of Fiat since early this year, has unveiled an ambitious five-year plan aimed at reaching long-term profitability following its bankruptcy and the sale of a controlling share in the firm to Fiat.
Chrysler Group LLC has been relatively quiet since it exited bankruptcy this summer, with the help of billions of dollars in aid from the United States government and a new partnership with Italian automaker Fiat, which owns 20 percent of the company.
That all changed last week, when Chrysler's new chief executive, Sergio Marchionne, and other top executives laid out details of how the automaker plans to increase its U.S. market share from its current level of 8 percent and achieve $3 billion in purchasing savings with Fiat by 2014.
"They said it would increase annual revenue to $67 billion by 2014, from $42 billion next year. It also predicted it would start earning a profit in 2011 and would be earning $5 billion a year by 2014," the New York Times reported.
As Agence France-Presse reported, Chrysler board Chairman Robert Kidder claims the automaker's top priority is to invest in creating "compelling brand and product offerings." The company will leverage its alliance with Fiat to develop global economies of scale.
"Efforts to shave manufacturing, material and administrative costs will continue," Kidder said, adding that Chrysler will also ensure that it matches production to actual demand which is "a significant departure from past practice."
The newly announced five-year plan includes spending $23 billion to overhaul or replace all Chrysler, Dodge, Jeep and Ram models by 2014.
"Much of the overhaul includes cost savings from combining purchasing and engineering with Fiat, and using Fiat's smaller, more fuel-efficient designs to replace aging Chrysler vehicles," the Associated Press reported.
While several current models will be phased out in the coming years, Chrysler said it will expand its offering in the U.S. to 28 models by 2014 from 23 in 2009. "It also plans to refresh 75 percent of its U.S. vehicle lineup by 2010 and have a totally new lineup by 2014," a separate AFP report said.
Chrysler's Dodge brand will sell three Fiat cars — a subcompact hatchback, compact sedan and midsize sedan — and two of them will replace the Caliber and Avenger. Chrysler also plans to add a large crossover in 2010 and, by 2013, will introduce new Dodge models, including a seven-passenger crossover vehicle and a compact car.
By the end of next year, most current Dodge models will receive new exteriors, interiors and engines. Ralph Gilles, Chrysler's chief designer, said Dodges will have better handling and more luxurious interiors, and will be quieter and more fuel-efficient, addressing consumer complaints about all these issues.
"We get it," Doug Betts, senior vice president of quality, said. "We're not in denial related to the public record for quality for Chrysler."
Jeep will get three Fiat-based models in 2013, including a new version of the Liberty. The Patriot and the Compass will be discontinued after 2012.
"The Chrysler brand, the company's smallest, will expand from four to six models, including a Fiat small car and a new Fiat-based crossover," according to the Times. The next four new vehicles for Chrysler will all be engineered on Fiat platforms; they will include a compact sedan (2012) and a new small car (2013). "A replacement for the Sebring sedan and a new mid-size crossover will also be released in 2013," according to Reuters.
The newly established Ram truck brand is considering adding two new commercial models built on Fiat platforms in the next few years. Few details were provided on the Ram brand, though the Dakota pickup truck will be phased out in 2011.
"If all goes to plan, and the U.S. market scratches its way up to a 14.5-million unit year in 2014 (Chrysler's estimate, more conservative than the 16.8 million unit sales Marchionne says analysts are predicting), Chrysler will break even next year, 2010," according to MotorTrend.com. "It will have positive cash flow by 2011 and pay off U.S. ($5.8 billion drawn) and Canadian ($1.5 billion) loans by 2014. Marchionne believes Chrysler can spend $4.5 billion per year on product development and be profitable."
The automaker's goal is to sell 2.8 million vehicles globally in 2014. It's an ambitious goal, to say the least, as it represents double the 1.3 million vehicles sold in 2009. International sales are projected to grow from 150,000 in 2009 to 500,000 in 2014. To build its American market share to nearly 14 percent by 2014, the automaker would need to increase sales to 2 million from about 950,000 in the U.S. this year. Chrysler sold 65,803 units in the U.S. in October, a 30 percent year-over-year decline.
Resources
Presentation: Chrysler's Plan
Chrysler Group LLC, Nov. 4, 2009
The Boss Speaks
by Ed Garsten
Chrysler blog, Nov. 5, 2009
Party's Over: A New Tone for Chrysler
by Bill Vlasic and Nick Bunkley
The New York Times, Nov. 4, 2009
Chrysler Presents Five-Year Plan
by Mira Oberman
Agence France-Presse, Nov. 4, 2009
Chrysler Aims to Pump Life into Struggling Lineup
by Dee-Ann Durbin and Tom Krisher
The Associated Press, Nov. 4, 2009
Chrysler Will be Profitable in 2011: CFO
Agence France-Presse, Nov. 4, 2009
Details of Chrysler's Turnaround Plan under Fiat
Reuters, Nov. 5, 2009
Fiatapalooza! Chrysler's Five-Year Plan
by Todd Lassa
MotorTrend.com, Nov. 6, 2009
Trackback Pings
TrackBack URL for this entry:
http://news.thomasnet.com/mt41/mt-tb.cgi/2191
|
Advertisement
|
Comment
4 CommentsIt's great to know that Chrysler and Fiat have such a wonderful plan to make billions in the next few years.
What I don't see is any plan or proposal to repay any of the $ Billions that was handed out by the US people though Mr. Obama's generosity. I can't believe such a wonderful plan could allow for such an oversight, so I have to believe that it has intentionally been ignored.
To their plan I say Bull; we all of us, as US citizens, also need bailed out. I lost a great job in the late 1970's when Westinghouse closed their Mfg facity in Columbus , Ohio. No, I didn't get a bailout. No, I didn't get any government assistance. No, I didn't find a job full over a year.
You know what? I survived, my wife and kids all survived.
November 12, 2009 3:30 PMMr Leedom,
While this article didn't clearly spell out Chryslers plan to pay back the government loans, the plan launched by Chrysler on November 4 clearly did lay out the plan. In Chryslers 5 year plan they clearly stated that they would have 100% of the government loans paid back on or before 2014.
It seems that your only rational behind your criticism to the government loans is pure jealousy. I am genuinely sorry you weren’t given the same assistance when you lost your job.
You won’t find a bigger critic of the Obama Administration then me. However I don’t see the fault in what they did here. The U.S. auto industry has been the back bone on the U.S. economy for 100 years now. During World War 2, GM and Chrysler both stopped building cars and started building tanks and air planes for the war. Without them, we wouldn’t have stood a chance. General Eisenhower said himself that without the Jeep the war would not have been winnable. 1 in 12 people in this country are employed directly or indirectly by the auto industry.
I think we owed the auto industry a little here and if they need a float for a few years then that’s what we need to do.
November 13, 2009 1:24 PMWell spoken, as any employee of the auto Industry would agree.
The 100 years that the backbone was the auto industry was fueled by everyone in the U.S.
The economy worked both ways; that was when the little guys could buy a car that didn't cost more than his home,until the million dollar bonuses were given to top management.
I seem to recall a few years ago a man named Iacoco (sp) took the helm of Chrysler after they first had gained a Governmnet loan. He got them back on their feet, making money, got a super big bonus, then resigned and then it all started again.
What makes you think that the auto industry was not partially to blame for our economic crisis. Maybe this time you will also get several million as a bonus for loosing market.
There I go again, that's my jealous streak showing because I didn't get a bonus for loosing control of a company.
November 13, 2009 3:42 PMI have read the five year plan for Chrysler and Fiat and I wish them well. However, it is very clear that the capital resources of Chrysler are very limited and the long-term outlook for this car manufacturer is bleak at best.
Consider: the greatly reduced dealership picture and a lackluster line-up of fuel efficient cars does not put Chrysler/Fiat in a strong position to have a major recovery which they desperately need to have for survival. Perhaps the best path for them is liquidation, which will no doubt be at their doorstep in the near future.
November 16, 2009 3:17 PM
