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Chrysler's Season of Change

Wednesday, 6 Dec 2006 | 11:27 AM ET

It's that time of year again.

The lights are up, "It's a Wonderful Life" will make it's regular airing, and one of the big 3 prepares for what could be some painful changes. This year the holiday "cheer" looks to be coming from Chrysler. The departure of Joe Eberhardt as Chrysler sales chief may be the first of more executive and corporate changes. Changes the company hopes will stem it's massive losses and test the tenure of CEO Tom Lasorda.

After losing more than $1.5 billion in the third quarter, and with sales down 8 percent this year, Chrysler needs a makeover. Some of it's problems stem from the truck and suv market slowing down. After all more than 60 percent of the vehicles Chrysler builds are trucks and suv's.

But there's also the question of whether Chrysler suffers from the traditional big three problem of having too many plants with the capacity to build too many vehicles? Right now, Chrysler utilizes 94% of it's capacity for building vehicles, according to the auto consulting firm, Harbour and Associates. While that's not much unused capacity, Chrysler dealers complained about being pressured by former sales chief Eberhardt to buy more models than they needed.
So CEO Tom LaSorda works on what is expected to be another restructuring for the automaker. Any plant closings and job cuts are not expected to be anywhere close to the 25,000 from GM and 30,000 from Ford.

We could here details of how LaSorda plans to cut costs by the end of the year. Just as Ford workers and investors ended last year waiting to see how their company would be changing, Chrysler employees and investors are in a somewhat similar position this year.

Tis the season in Detroit.

Questions? Comments? BehindTheWheel@cnbc.com

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  • Phil LeBeau is a CNBC auto and airline industry reporter based in the Chicago bureau and editor of the Behind the Wheel section on CNBC.com.

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