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Chrysler Joins Jenny Craig? Analyst Thinks Automaker Needs To Lose Weight

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Supermodel Elle McPherson with Fiat 500C in London

Supermodel Elle McPherson with Fiat 500C in London

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Chrysler 300 at Golden Globes

Chrysler 300 at Golden Globes

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Angular Front Exterior View - 2010 Chrysler PT Cruiser Classic 4-door Wagon

Angular Front Exterior View - 2010 Chrysler PT Cruiser Classic 4-door Wagon

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2009 fiat 500 convertible 500c 2 020

2009 fiat 500 convertible 500c 2 020

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The past couple of years haven't been kind to automakers. Like ballast on a sinking ship, many brands were thrown overboard as car companies scrambled to stay afloat. One major automaker managed to dodge that kind of unpleasantness, but now a major auto analyst thinks it's high time for a purge.

Chrysler was the only one of the Detroit Three to avoid losing brands during the recession -- in fact, it gained a brand by spinning its trucks into the new Ram lineup. That feat was made possible, in part, by the promise of cash and stability provided by Chrysler's new lifepartner, Fiat, which is planning to drag even more brands under the pentastar tent.

This kind of expansion and diffusion is exactly the opposite approach followed by Chrysler's cross-town rival. The "One Ford" strategy has led Ford Motor Company to hone its focus and sell off anything that might distract from Ford's primary goal of selling Ford vehicles. The cast-offs have even included Volvo, a brand with a loyal customer base and a strong product lineup. That rigorous focus has played particularly well for Ford on the lots and on the balance sheets, so can moving in the opposite direction fare well for Chrysler?

Analyst Max Warburton of Bernstein Research doesn't think so. In fact, he says that it's time for Chrysler to go on a crash diet. Warburton admits that CEO Sergio Marchionne has done a good job of decreasing Chrysler's expenses, and he thinks the company will do okay on the numbers front in the immediate future. However, he insists that for Chryler to experience a real turnaround, the company has to address some major problems -- namely, an anemic product portfolio and very little new-vehicle development (even considering new models coming from Fiat). Warburton suggests that Marchionne ditch Dodge and Chrysler and hold on to Jeep, Ram, and the new Fiat lineup.

Now, on the one hand, there's some merit to Warburton's arguments. We all know that Chrysler put the brakes on most new product development over a year ago, and it's been slow to ramp up again. We also know that the lack of new products in the pipeline has forced the company to keep some less-desirable models in showrooms, like the once-hot, now-not PT Cruiser. That's not the sort of thing that's likely to bring in new customers.

On the other hand, we think there's some value to the Dodge and Chrysler brands -- particularly when it comes to well-received models like the Chrysler 300. And although we're very excited about the stateside launch of the Fiat 500, we're not sure that Fiat could pick up the slack left in the wake of two major American marques.

Big changes have taken place in the auto industry over the past couple of years, and most of them have been a little painful. Then again, wise men (and Denise Austin) say that without pain, there is no gain. We'd never want to dub Denise an auto analyst, but maybe she's onto something.

[AutoNews]

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Comments (8)
  1. Hmmm. Actually, when your brand is so crippled and no one wants to buy a Chrysler or Dodge because the quality is soooooo bad, dumping the brands is a good idea from a desperate company. The market has spoken. In distancing themselves from the brand, Fiat will also facilitate the badge engineering strategy that is the only option for the next 4 years with the american lineup.
     
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  2. No, I think keeping their brands is a good idea. R2Dad says that certain models conjure up negative connotations so much so, that they need to drop them altogether. However, as Bill said, there ARE popular vehicles and I think that if Marchionne and Co. focus on those few popular-selling cars from each brand (Chrysler, Dodge...) and make them AWESOME, inside and out. Do that, advertise the hell out them and make it be known that is the NEW Chrysler/Fiat. That should turn some heads.
     
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  3. I can't count the number of times Chrysler has been "new". And that's only back to Lee Iacocca. Also, Hummer has proven that turning heads is not a business model. It's not enough to have a "me-too" in this crowded market--just ask Acura how that's working for them. I sincerely hope Chrysler/Fiat can set a course that brings some pride back to the marque. I just don't see this being a quick,inexpensive task in a day and age where brand loyalty is so fleeting and quarterly numbers drive every decision.
     
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  4. So Mr. Warburton says that in order for Chrysler to experience a real turnaround, the company has to address some major problems -- namely, an anemic product portfolio and very little new-vehicle development?
    Where has Mr. Warburton been since the Chrysler plan was revealed in November 2009? What does he think Chrysler's BEEN doing?
     
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  5. R2Dad, if I may suggest, I didn't hear Sergio Marchionne or his associates promise that this would be a quick or inexpensive task. After all, his plan was aptly described as a 5-year business plan.
     
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  6. Warburton is the same fool that said, based on trusted 'sources' that GM 'will' buy Chrysler for key technologies/brands (Jeep, then-Dodge Trucks) as well as some magical cash-horde they had under Daimler, supposedly around 10 billion in cash.
    I guess when you throw so much shyte against the wall, eventualyl something will stick.
     
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  7. Have to respond. Who says Chrysler makes bad cars? I've owned Jeeps, Dodges, Chryslers and Plymouths for years and they are and have been, totally dependable without exception. I've driven them hundreds of thousands of miles, towed with them, raced them, gone off road in them and just love their style, comfort and dependability. I'd take them over anything and I can afford to spend alot more. My friends have so many problems with their BMWs, Benzes and other imports, but my Chrysler products keep humming along.
    Don't believe the hype, Chryslers are as good as any brand and better than most. Buy one and see.
     
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  8. Chrysler needs to just try to stay afloat till the new Grand Cherokee, 300, and Charger are released. These are KEY vehicles for Chrysler...The Grand Cherokee could itself keep the brand steady for a short period of time if necessary. I'm still a little confused on why they had to separate Dodge and Ram from each other. If they dropped the Chrysler and Dodge name, there would be no "still-American" sedan any longer...Only Jeep SUV's and Ram trucks...If they style and brand it correctly, Chrysler could be an immediate Lincoln and Buick competitor, which I would love to see.
     
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