Chrysler demise no shock

BY RICHARD BARON

OPINION: Chrysler filing for Chapter 11 bankruptcy protection should come as no surprise.

The minnow of the Big Three was always going to be the first to fall. Especially given its run by US private equity firm Cerberus Capital Management, which bought 80.1 percent of the company from Daimler-Benz in 2007. This, remember, is one of the two firms that sold bench top maker Formica to Fletcher Building. Enough said.

For years Chrysler has churned out poorly designed and built cars - not even the efficient Germans could lift quality woes (ironically, Mercedes suffered form their own quality problems for a few years).

The right-hand drive Chryslers and Jeeps we get here are built in Belgium, yet they have suffered from the same fit and finish problems as their American counterparts.

Chrysler does periodically produce great automobiles - these usually pop up when the company is facing one crisis or another. Sadly for Chrysler, not this time.

Vehicles such as the Plymouth Prowler, Dodge Viper, Chrysler 300C, Dodge Charger and the ubiquitous Jeep brand have been let down by very average cars such as the Neon, Nitro, Sebring, and the Crossfire to name but a few.

The PT Cruiser is a prime example of great American design let down by poor business execution. This car cried out for a V6 option but was built on the Neon platform that limited engine choice to an asthmatic, under-powered four cylinder.

Like Ford and General Motors, Chrysler has relied on sales of SUV's, people-movers and trucks to generate profits and the combination of oil prices, commodity prices and the economic meltdown in 2008 slugged the company where it hurts.

American manufacturers have been playing catch up with Japan for nearly 40 years, and in that time they have failed to learn three basic lessons:

Innovate before your competitors

Don't wait for hordes of Joe six-packs to buy Camry's, Maxima's and Honda's before rolling out the newest generation of a five year old model.

Once you lose customer loyalty, it is very hard to get it back.

Keep badge engineering simple, stupid

The Americans have made a mess of badge-engineering by producing the same basic car for three different marques, and then fitting out each model with brand-unique parts, effectively doubling the cost of R&D and manufacturing for those cars.

Take for example the Lincoln Navigator / Ford Expedition. Other than the body, chassis, mechanicals, seat frames and some switchgear, neither of them use common components.

GM Europe got it right by making right hand versions of Opel's Vectra, Insignia and Astra and slapping a Vauxhall badge on it.

Reduce the number of options to a minimum

It is really very simple to build a base, intermediate and premium model, and offer a limited number of options such as heated seats, towbar, suspension upgrade, sunroof, metallic paint, alloy wheels, sat-nav and a premium audio system.

Offering so many options that you can make over 2,000 individual variants of one model is excessive, and the company ends up making a loss on nearly all cars. Only sales of trucks and SUV's have kept the Big Three afloat, and in our economic climate, those vehicles are heading the same way as the dinosaurs.

The Japanese figured it was cheaper to load the car up with goodies at the outset than to offer them as options later. They only offer options that increase profit margins.

The alliance with Fiat should show promise for the Italians and Chrysler, especially now that Fiat is trying to acquire the GM brands Opel, Vauxhall and Saab as well.

Chrysler gets the expertise to mass produce smaller, fuel efficient vehicles and a sales channel into world markets, whilst Fiat gets a US dealer and distribution network for Alfa Romeo - a market where it has previously failed miserably.

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