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

April 16, 2010
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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