Chrysler surviving

May 3, 2011

A new kind of customer began showing up at Schultz Motors of Milan after Chrysler ran a defiant, two-minute ad during the Superbowl -- young guys who’d never owned a Chrysler before.  But they wanted the car rap star Eminen was driving in that ad. 

Tyler Schultz says it helps that the 200 is a more appealing car than its predecessor the Sebring.

"The interior is very well-appointed, it's very driver-friendly, and you can see the list price is $24,000.  So with the incentives on top of that it comes in really affordable.  So this car’s got a lot of bang for the buck."

But today, Schultz has only a single 200 on the lot, and it’s already sold.  Chrysler also has a redesigned 300 sedan.  But it’s taking longer to get the car to dealerships than people expected.  Schultz says he can get enough Jeep Grand Cherokees, but, with gas prices going up,

"The demand has just fallen off the table based on that factor alone.   It’s fuel economy, fuel economy, fuel economy."

It’s likely that Chrysler is dancing as fast as it can.  The company can’t go back to its old ways, when it produced too many cars and had to use deep discounting to sell them.  And it will take time for Fiat’s fuel-saving engines and transmissions to make their way into Chrysler cars, SUVs and trucks.    

Tracy Handler is an analyst with I-H-S Automotive.  She says Chrysler also has to watch quality with an eagle eye.

"They really need to get the product out, but they need to get it out perfectly.  They don’t have room for any errors here so it’s better to hold off at this point, you know,  be a little bit slow on the ramp up, but send out quality product when they do."

Some industry observers remain pessimistic about Chrysler’s chances in the long run.  Old competitors like Ford and GM and new competitors like Hyundai are offering more fuel-efficient vehicles, more choices, better quality, at a faster pace. 

Then there’s Jim Hall.  He’s founder of the consulting firm 2953 Analytics.

"I personally believe they can do it," he declares.

Hall thinks the company’s partnership with Fiat will make the difference.  The marriage gives Chrysler access to a global market and to technology it couldn’t afford to develop on its own.  And Hall says Chrysler’s cars are becoming worthier of those great ads. 

"The products are better than they’ve been in decades, and this is a case where Chrysler’s partner actually wants and needs Chrysler."

And in fact, Fiat is on a fast track to majority ownership of Chrysler.   That could happen by the end of the year. 

Meanwhile, Chrysler’s sales are slowly improving.  April sales rose 22-percent, the 13th consecutive month of year-over-year sales gains.   

The company made a profit of $116-million, the first profit since 2006.

And Moody's this week gave Chrysler a "B2" rating and "positive outlook."

Chrysler CEO Sergio Marchionne says its further evidence of the speed at which the company has been able to realize its profound culture change, less than two years after Chrysler exited from Chapter 11 bankruptcy.

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