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Behind The Wheel

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May.01

9:49 AM ET

Friday, 1 May 2009

Chrysler Recovery? It Depends on the Cars

Posted By:Phil LeBeau

Topics:Marketing | Automobile Industry

Sectors:Automobiles and Parts

Companies:Chrysler

You cover enough bankruptcies, you get used to the strange and painful routine. Closing the plants, targeting the jobs to be cut, and outlining how a company in Chapter 11 will be filed in court papers and pretty clear from the beginning. In other words, the cutting and paring of costs is the easy part. It's the re-building and changing of the company that is the tough part.

Now before you e-mail me and scream, "Hey, there's nothing easy about thousands of people losing their job," let's be clear about what I'm saying. I agree that the weeks and months to come will be brutal for thousands of Chrysler workers who will lose their jobs when their plants are shut down for good. But for those fixing Chrysler, lopping off plants is not the hardest part of this transformation from money loser to profit maker.

The tough part will be making the leaner Chrysler that emerges from bankruptcy a competitive auto maker with the models people want. That truly will be the measure of whether new Chrysler is a relevant player. If Chrysler emerges from bankruptcy with weak product plans and an inconsistent vision for the future, it will simply drift. As Rick Wagoner would often say, "You can't cut your way to long term profitability." At some point, you have to grow the business.

So it comes down to whether the new Chrysler and its partner Fiat can crank out new models with a new marketing campaign that will bring back customers. They'll have to move fast, but it will take a while for the changes to show up. Chryslers product pipeline is weak, its marketing approach vague, and the plan for the next five years is anyone's guess. And on top of that, the company will be cutting hundreds of dealerships around the country, giving some folks the impression Chrysler, Dodge, and Jeep are fading away.

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