Marchionne Considers Cutting Underperforming Chrysler Models

July 6, 2009

Sergio Marchionne took the reigns of Chrysler less than a month ago, and already he's showing that life at the new Chrysler/Fiat isn't going to be la dolce vita. Taking advantage of the capital and credibility that come at the start of many corporate tenures, the CEO is making some very bold choices--and some difficult ones, too.

Over the weekend, we mentioned that Marchionne is readying plans to rebadge a number of Dodge models for European markets and to rebadge Alfa Romeos for America. Now comes news that Marchionne also seeks to cut a number of underperforming and duplicative models from the Chrysler lineup. Facing the chopping block: the Chrysler Sebring, the Jeep Compass, the Jeep Patriot, and potentially the Dodge Caliber. Marchionne has stated that he hopes to have a "road map from a product standpoint" in place by the end of this week. How soon that road map might become public isn't known.

Another interesting option on Marchionne's table includes dropping brand promotion in favor of model promotion--much like Fiat has done with the 500, which is publicized in Italy simply as the "500", with any number of variants (e.g. the "500 Abarth"). That might take stress of individual product lines and focus attention on specific, popular vehicles. The Jeep Wrangler could be a candidate for such treatment.

A larger problem for Marchionne seems to be Chrysler's image among consumers. Some of the CEO's colleagues from Italy think the Chrysler brand needs a serious overhaul. Said Giuseppe Berta, professor of contemporary history at Bocconi University in Milan: "Chrysler models are old and they have little appeal on the market." Anecdotally speaking, there may be some truth to that; however, the new management might want to get statistical data to back up Berta's statements, since Nielsen's latest survey indicates that Dodge and Chrysler are the 5th and 6th most researched vehicles among American car buyers, respectively. Even more importantly: 88% of Chrysler autos are sold in the U.S. Consider that a few words to the wise.


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