Chrysler post-Daimler

CHRYSLER has teamed up with Nissan for a South American badge-engineering project to quickly boost its international sales volume and says it is open to other joint projects with the Japanese car-maker.

Keen to boost cash-flow under its new owner, private equity firm Cerberus Capital Management, Chrysler has announced it will sell a re-badged version of the Nissan Tiida sedan in South America.

The news has sparked speculation the deal could lead to a formal alliance with the Nissan/Renault group.

The move comes as Chrysler continues to try to source a much-needed affordable light car from Chinese manufacturer Chery for both US and international markets.

Currently, Chrysler relies more heavily on its domestic sales than Ford or General Motors and has launched a bold plan to double its international sales in five years.

It’s a move that new Chrysler chief executive Robert Nardelli describes, in mangled English, as “increased globality”.

Chrysler has some of its own models almost ready to go for international markets, including the Dodge Journey crossover that is due in Australia this September, but it is increasingly looking to other car-makers to help boost its overseas sales.

Chrysler vice-chairman and president Tom LaSorda said that currently the only supply deal between Nissan and Chrysler was for the Tiida in South America, but hinted that others could be on the way.

“We had a specific project in a specific country with a specific car and that is sort of what we did initially,” he said. “We will continue dialogue on studying other projects.”

While the Tiida deal will give Chrysler a much-needed small sedan in South America, the company is more reliant on a new D-segment hatch which it desperately needs for not only international markets, but also the US.

Left: Chery A5.

Ford US has announced it will bring the next-generation Fiesta to market in 2009, while GM already has its Daewoo-sourced Aveo (sold in Australia as the Holden Barina).

Mr LaSorda admits the Chery deal will not produce a light car in the immediate future.

“As far as bringing a (D-segment) product from Asia into Europe, we still say that is two to three years away,” he said.

When pressed as to why it was taking so long, LaSorda hinted at some frustration in dealing with Chery.

“I don’t know if you personally have negotiated in China before... if you could do it faster I would like to talk to you. It is definitely on solid ground and we are making much more frequent visits there,” he said.

Chrysler chairman and joint vice-president Jim Press said Chrysler’s new position as a privately owned company put it in a good position to bring new projects to market quicker than larger publicly owned car-makers.

“I don’t think you will find a company that can move as quick or as swift to develop appropriate cars for those emerging segments,” he said.

“What Tom has done in terms of preparing the company and developing this relationship with Chery, and others that you have heard about, puts us in a position to move faster than if we had to go to the lab and start over bending sheet metal from the beginning,” Mr Press said.

The new-found agility of Chrysler was also a feature LaSorda highlighted when asked about the difference with working with DaimlerChrysler before Chrysler was sold off last year.

“When we need an answer we get a fast yes or a no, not a slow maybe. So the decision-making is really fast,” Mr LaSorda said.

“We are making decisions on the future of the company at record speed and I think that is the main difference between the two companies.”

The team at Daimler is also glad to be operating on its own, although it still owns close to 20 per cent of Chrysler, free of the financial obligations of being tied to the American brand.

Daimler chairman Dieter Zetsche told GoAuto the company is now more focussed.

“The amount of time we are investing in Chrysler has been reduced significantly and we are focusing on Daimler, Mercedes models, trucks and vans. That is the most significant change.”

Looking back at the failed partnership, Mr Zetsche said the original idea that Mercedes and Chrysler would share a lot of technology did not work because they were unable to lift the Chrysler brand to a point where the purchase price would cover the cost of the technology.

“We thought we could develop the Chrysler brand, but the customer didn’t really applaud that,” Mr Zetsche said.

Under its new management, Chrysler is attempting to wean itself off fleet deals that boost sales, but not profitability.

“To some extent, (selling to) fleet is a bit like kissing your cousin, but retail is really where the cash register gets hit,” Mr Press said.

He said the new Chrysler management considered the company had been selling too many cars to fleets.

“We were overly dependent on fleet to maintain a high level of overhead. Really that was a business that was not doing a lot of long term good to residuals,” he said.

Mr Press indicated that overall Chrysler sales could dip in 2008 thanks to reduced fleet sales.

“Our retail sales will be even with, or even a bit above, last year. But what we have done is we have taken a lot of production adjustments for fleet. A substantial fleet reduction will occur. So when you report sales, don’t just focus on the total. You have to look at retail sales,” he said.