More Chrysler models on the chopping block?

Mopar Man

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DETROIT (Feb. 8) - Automaker Chrysler LLC aims to cut its product lineup by around a half and dramatically shrink its dealership network so it can sell its three brands under one roof, the Wall Street Journal reported on Friday, citing people familiar with the plan.

In 2007, Chrysler said that it would discontinue four models that weren't selling well, including the PT Cruiser, which was originally a hit when it launched in 2000. The Wall Street Journal reports that Chrysler will reduce its current line of about 30 trucks, cars and sports utility vehicles to about 15 within a few years.
The proposal to cut the struggling U.S. automaker's product line of around 30 different trucks, cars and sports utility vehicles across the Chrysler, Dodge and Jeep brands to 15 or more within a few years is part of a drive to cut costs and create a leaner, more profitable company, the paper said.

Chrysler CEO Bob Nardelli has been working to turn the automaker around since private-equity firm Cerberus Capital bought an 80 percent stake in the company from Daimler AG last August. Since that time, Chrysler has cut thousands of jobs and sought other ways to cut costs.

The new cost-cutting plan is also expected to include a significant reduction in the 3,600 dealerships that Chrysler has so that the remaining ones can focus on selling the Chrysler, Dodge and Jeep brands under one roof.

Analysts welcomed such a move, saying a smaller, more focused Chrysler would have a better chance to thrive.

"This is just what the doctor ordered," said John Casesa, a former Wall Street analyst who now heads an advisory firm in New York specializing in the auto industry. "This strategy is decades overdue.

"It's an absolute imperative to have a viable business in North America," he added. "This company needs to eliminate waste that goes with having duplicate products in each (brand) channel and smaller stores with low profitability."

Shrinking the number of dealers will be difficult, however, because of laws in all the states protecting those businesses, analysts said. If Chrysler, with about 3,600 dealers, wants to move quickly, it likely will have to offer financial incentives.

Over the years, the automaker and its U.S. rivals, General Motors Corp and Ford Motor Co, have tried to shrink their dealer numbers, often facing great resistance. However, analysts said some dealers may be more receptive now, given the weak U.S. economy, if the offers are generous.

A smaller dealer base will translate into more attention for Chrysler's cars and stronger advertising, Casesa said. "A weak dealer network is a silent killer; like blood pressure," he said.

Chrysler said in a statement that Vice Chairman Jim Press had just completed an eight-day tour of about 3,000 Chrysler dealers during which the company had unveiled a new corporate initiative called "Project Genesis." The tour came ahead of the annual National Automobile Dealers Association meeting, taking place in San Francisco.

The head of the largest U.S. dealer called the plan "brilliant," saying his large stores were well placed in such a new environment.

"It will be extremely controversial," AutoNation Inc Chief Executive Mike Jackson told CNBC Television on Friday. "What's brilliant and powerful is that they've combined their product strategy with their retail strategy.

"You can't survive unless you get the entire product offering. You'll either be out of business or in a high throughput model," he added. "This is where they had to go."

The Chrysler project is designed to "align the dealer network with the product portfolio," the company said, without commenting directly on the newspaper report.

"At this point, we have not made any final decisions regarding our dealer optimization or future product plans, nor has the company set any firm timelines," Press said in the statement. "Our dealers are and will continue to be an integral part of this process moving forward."

Chrysler is owned by private equity company Cerberus Capital Management, which bought an 80 percent stake in the company from Daimler AG last August. Since appointing former Home Depot Inc CEO Robert Nardelli to run the company, Cerberus has been expected to shake up established practices in Detroit.

Indeed, in an unexpected move last week, Chrysler abruptly canceled contracts with financially struggling supplier Plastech Engineered Products Inc and moved to seize equipment at the supplier's plants that the automaker said it owns.

That dispute led Plastech to file for bankruptcy and stop production of parts for Chrysler, forcing the automaker this week to shut production at four assembly plants for a day before an interim deal was reached.

Last month, Chrysler officials told Reuters that the company was rolling out an initiative called "New Day" that included a $150 million package of vehicle upgrades. Chrysler also said at the time it was committed to removing weak links from its product lineup.

"In the end, we will have a more viable dealer body focused on the customer," Press said on Friday.

Also on Friday, Jerry York, an advisor to billionaire investor Kirk Kerkorian , said at a panel in Chicago that the U.S. automaker cannot succeed by itself. York is a former Chrysler chief financial officer and Kerkorian has tried to buy Chrysler in the past.

"Chrysler as a stand-alone company is not viable," York said at an event being held in conjunction with the Chicago Auto Show. He added that Cerberus was likely weighing all options due to the intense pressure Chrysler is under.

Last November, York said at the Reuters Autos Summit he ultimately expected Chrysler to be combined with an overseas automaker once Cerberus fixed it up. Some analysts have suggested Carlos Ghosn , chief executive of Japan's Nissan Motor Co Ltd, might be a willing partner.

source: http://money.aol.com/news/articles/_a/more-chrysler-models-on-chopping-block/20080208070109990001
 

Viper007Bond

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Pretty sure the Viper won't be one thankfully. It makes a profit and while it doesn't profit nearly as much as the huge production cars, the non-financial aspect of the car is immense.
 

Mopar Man

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Believe me, from what I've heard every single Viper built gets sold, there are never any sitting gathering dust.
 

TC

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Good. They have too many models anyway.
 

WheatKing

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Mopar Man

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Blind_Io

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So they are going to kill the weak, and weed out a good number of dealerships. It sounds like a plan, but I don't think a partnership with Nissan will necessarily be a good thing. I have never liked Nissan interiors, I find them cramped and with too little legroom.

Interesting find.


EDIT: Here's the whole article.
In all the hoopla over the past few weeks about Dodge's new entry to the Muscle Car Wars, the media stories popping up hinting Chrysler may be thinking about discontinuing the Dodge Viper have gone relatively ignored by the majority of the product press. Unfortunately for those with a love of the serpentine-named supercar, we've learned through several of our sources that the decision to kill off the next generation of the Dodge Viper has already been made. The next generation Viper roadster, referred to internally as ZC-D27 -- and ZC-D29 in the case of the coupe -- are no longer part of Chrysler LLC's future plans. They've been shuttled to the side -- we're assuming as part of "Project Genesis," the new game plan "intended to align the needs and wants of the customer with its [Chrysler's] product portfolio and the dealer network." Or perhaps it was part of "Project Alpha" the game plan prior to "Genesis" and before Cerberus really got a good look at the books. All we know is the decision was made during the period Cerberus has been running the show in Auburn Hills.
In other words: Shit.
Originally, the new version of Dodge's halo car was set to start rolling down the assembly line in January of 2009 alongside two Chrysler badged platform mates. These two new Chrysler branded performance vehicles were to be modeled after the Firepower concept car. The first one, a roadster, was given the internal name ZC-C27, and a coupe version was given the internal name ZC-C29. However we know the decision to kill the Chrysler-brand versions was made sometime in the middle of last year.
This certainly would've hurt the business case for the entire "ZC" program. The Viper is hand built at the Connor Avenue Assembly Plant. A plant that, without the Firepower, would do nothing but build Vipers and the big V10 engines that go in them. Its a plant that we're fairly certain Chrysler's new Six Sigma-loving management would probably like to close.
The general unrest and financial struggles of Chrysler played a huge role as well. When this embattled company chooses how to spend their R&D money, they have to choose very carefully. Sadly there are many other vehicles in the Chrysler lineup that need attention before they can start to think about a low volume, hardcore sports car again -- halo status be damned.
What now?
Chrysler recently launched the freshened, more powerful, fourth generation Viper for the 2008 model year. Original plans had this car being built for only two model years. It was meant to be a stop-gap model until the next generation "ZC" car could be brought online. Now that an all new Viper won't happen, sources tell us that the fourth generation Viper will instead be built until around the 2011 model year. We'd also venture a guess that so long as the fourth gen is being built, a few of the track prepped ACR models will continue to trickle out of the factory.
What happens after 2011? That's a question we don't yet have an answer for.
It's hard to imagine Chrysler leaving the halo car market for good -- but we're thinking the future will call for a more affordable halo. Not just more affordable for the buyer but more affordable for Chrysler build. We know they'll want something that can still put up a fight with the Corvette -- at least the base model -- but at the same time, be much closer to the Corvette's base MSRP.
In the next one or two years, we can only a hope a concept car pops up on the auto show circuit that can give some hope for an all new, SRT hot rod. For now though, we mourn the loss of a legend.
http://jalopnik.com/354292/the-dodge-viper-is-dead-in-lieu-of-flowers-please-send-rd-funds

Esoteric-Hearse.jpg
 
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Mopar Man

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Uh, that was already posted right above you Blind.
 

Blind_Io

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I know, I was just posting the text for you guys, the link is just out of habit.
 

Mopar Man

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I know, I was just posting the text for you guys, the link is just out of habit.

That's understandable. Why didn't he just copy+paste the text anyways!
 

Elmo187

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Chrysler recently launched the freshened, more powerful, fourth generation Viper for the 2008 model year.
you guys do realize that the current version is technically the 2nd generation right? it only has a slightly bigger engine with more power but it has the same looks as the 2nd generation.

generations only refer to the changing of the looks. so therefore, the first generation was the first even though it went through an exhaust positioning change and the 2nd only went through a power upgrade through its first years and an engine upgrade through its current years.
 

Mopar Man

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Yea that is true, they just made some adjustments, this isn't really an "all new" viper.
 

Mopar Man

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The 3rd and 4th look exactly the same except for the hood. All the changes were made under the body. And I still love how they don't have doorhandles. lol
 

klutch

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Do it for me.
Chrysler desperately needs to get rid of a chunk of their dealer network, and slim the model lineup. They've got so many useless, poor-selling models...the entire Jeep lineup, par exaple, is garbage in terms of quality, and they've got 5 models too many. Chop, Cerberus, chop. And get rid of the Charger while you're at it; I hate how police around here are packing those with the 5.7....
 

klutch

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Do it for me.
Based on that rationale, cutting it would 'make sense for the long term financial direction of Cerberus Capital and its holdings'. Just like scrapping the Viper.
 

Lupin_IV

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A company turns better profits mass producing cop cars from existing research than they do producing sports cars that need consistent updates.

That's why the Honda axed the NSX; it was no longer cutting edge, and therefore no longer profitable as a sports car.
 
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