Commentary for Chrysler: "Forget about radically redefining brands"

[nadepalma]

Mark Phelan is saying what many of us on GMI and other places have been saying for awhile: You dont need massive restructuring of the brands themselves, but specific fine-tuning and dealership consolidation.

There have been many of us on GM who have made the exact same claims.

SOURCE: Free Press

Originally Posted by Free Press

For Chrysler, redoing brands just a start
November 25, 2007
BY MARK PHELAN
FREE PRESS COLUMNIST

Forget about dropping or radically redefining brands. Chrysler LLC needs to focus on patching the holes in its model line, sharpening the definition of its Chrysler, Dodge and Jeep brands and developing first-rate vehicles to cure what ails it.

"It can be done," said Jim Hall, managing director of 2953 Analytics, a Birmingham-based industry analysis firm. "Chrysler can become a premium brand, Dodge could appeal to younger buyers, and Jeep could be the tough, off-road brand."

The widespread expectation in the industry is that Chrysler management wants to have fewer dealers, with all of them selling all three of its brands. The automaker currently has two separate networks: one for Dodge and one for Chrysler and Jeep.

This will require dropping some models, but Chrysler builds an abundance of cars and trucks nobody will miss. The tough part of the job will be giving its Chrysler and Dodge brands distinct and appealing identities, building vehicles that live up to that image and reducing its number of dealers drastically.

Putting all three brands under a single roof would allow Chrysler to eliminate the overlap that saddles it with vehicles that compete with each other.

"If you've got three brands in one building, you need better differentiation among their models," said Michelle Krebs, editor of AutoObserver.com.

Consider the Dodge Durango and Chrysler Aspen SUVs. Through October, Durango sales had fallen about 20,500 from 2006, and Chrysler had sold just 24,251 Aspens. Chrysler's net return for the millions of dollars invested to develop, market and build the new SUV was a measly 3,735 sales.

You don't have to be Alan Greenspan to recognize the Aspen as a deadbeat deficit spender.

That's not to say Chrysler's strategy of building several different models -- "top hats" the company calls them -- on a single set of components should go. It can work brilliantly, as demonstrated by sales of the Dodge Charger and Chrysler 300 sedans, or the Chrysler Town & Country and Dodge Grand Caravan minivans.


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[nadepalma]

Originally Posted by Free Press

That's not to say Chrysler's strategy of building several different models -- "top hats" the company calls them -- on a single set of components should go. It can work brilliantly, as demonstrated by sales of the Dodge Charger and Chrysler 300 sedans, or the Chrysler Town & Country and Dodge Grand Caravan minivans.

I agree with just about everything he says except for the Minivans comment.

I still maintain that if they consolidate the sales channel into one, there is no need for two minivans on the same showroom floor as they aren't differentiated enough. One excellent Grand Caravan on a consolidated showroom floor is more than sufficient.

What's more, if they used the money they would have used to market the Town & Country and lumped it into the Dodge Grand Caravan's ad budget, they could reach even more potential customers.

And if Chrysler moves their scope upmarket, then having a "luxury minivan" is even MORE un-needed. Has anyone gone and purchased a minivan lately? They are expensive enough, come with tons of features (yes, some would say "luxury" features, and have countless configurations, engine choices, etc. ---- they are already a "quasi-luxury" vehicle.

Better to just keep it as simple as possible and make a solid effort to refocus Chrysler as a "luxury" brand as it should have been all along.

[jbartley]

this idea seems familiar. Maybe the P-GMC-B consolidation is a good idea for Chrysler to follow.

[Michael_S]

The article assumes that 20,000 of the 24,000 people who purchased an Aspen would have just bought a Durango if no Aspen was available.

I'm not sure that's true.

I know people that still see a big difference between Dodge and Chrysler, just like there are people who still hold Mercury as being much more sophisticated and prestigious than Ford. When GM ditched Oldsmobile, many Oldsmobile fans switched to brands outside the GM stable.

I especially think they need to be careful with the Chrysler Town & Country. Even if the Dodge Grand Caravan is identical to the Town & Country in all ways, there may be 20,000 or even 50,000 Town & Country loyalists who just won't look at the Grand Caravan at all. I could be wrong. But if I'm right, then ditching the T & C could cost Chrysler billions.

[EDIT] Let me be clear. I am not ***. I never have been g ---- oops, channeling Larry Craig there . More seriously, I personally favor consolidation in Chrysler and also GM, with lots of excess brands ditched. But lots of discussions here at GMI have convinced me that many brand loyalists who would love to buy a 300 would not glance at a 300 with a Dodge badge on the hood, and many brand loyalists who would love to buy a G8 would not glance at one with a Chevy badge on the hood.

[skylark68]

Originally Posted by jbartley

this idea seems familiar. Maybe the P-GMC-B consolidation is a good idea for Chrysler to follow.

I agree completely. I dislike the idea that has been circulating for Dodge to be a truck seller and Chrysler the car seller. Selling all 3 brands should allow Dodge to be a volume player and Chrysler an up-market player with Jeep acting as a rough equivalent to Hummer.

[Bravada]

I agree with Nick - the T&C as a lousely retrimmed Caravan needs to go. The T&C should return as an Enclavish luxury crossover/people mover. Add a line of large RWD cars and a midsizer and here's the new Chrysler!

[gardnet1]

I think the main reason Chrysler is taking this approach with respect to Chrysler and Dodge is to coax single brand dealers into selling out/merging. It is their bargaining chip. A standalone Dodge dealer will have a hard time just selling trucks, SUVs and Sprinter Vans and a Chrysler dealer will have a hard time just selling Cars and Minivans. Jeep isn't as affected, but it won't get the Gladiator truck under this scenario. Once the consolidations and dealer downsizings are completed then they can reverse some of these changes as needed.

[gardnet1]

Originally Posted by Bravada

I agree with Nick - the T&C as a lousely retrimmed Caravan needs to go. The T&C should return as an Enclavish luxury crossover/people mover. Add a line of large RWD cars and a midsizer and here's the new Chrysler!

The T&C name carries more weight with me as it is more prestigious. But yea under the same roof, you could have a Caravan with the top of the line T&C trim (think King Ranch/Eddie Bauer, LLBean, etc.)

And this would be just one opportunity to save greatly on marketing costs.

[gardnet1]

Originally Posted by Michael_S

The article assumes that 20,000 of the 24,000 people who purchased an Aspen would have just bought a Durango if no Aspen was available.

I'm not sure that's true.

True, but how much did Chrysler spend on marketing, engineering, rebates, etc for the Aspen launch? Even if only 5,000 of those sales would have been Durango sales, then Chrysler would have been better off without the Aspen. Now if Aspen were an upmarket Durango trim level such as Eddie Bauer or King Ranch, then this would have made sense.

This ranks as one of Chryslers biggest failures over the past 5 years along with the Jeep Commander which cannabalized sales directly from the Grand Cherokee.

[starlightmica]

Originally Posted by nadepalma

I still maintain that if they consolidate the sales channel into one, there is no need for two minivans on the same showroom floor as they aren't differentiated enough. One excellent Grand Caravan on a consolidated showroom floor is more than sufficient.

Better to just keep it as simple as possible and make a solid effort to refocus Chrysler as a "luxury" brand as it should have been all along.

Chrysler ended up losing sales when Plymouth and its Voyager got axed. Despite there being a bottom feeder model T&C, they were lost. The risk to further consolidating minivan models is to lose the brand equity of a top seller.

Chrysler attempted to move upwards with the 300 and the Pacifica, not exactly a raging success.

[Michael_S]

Originally Posted by starlightmica

Chrysler ended up losing sales when Plymouth and its Voyager got axed. Despite there being a bottom feeder model T&C, they were lost. The risk to further consolidating minivan models is to lose the brand equity of a top seller.

I agree.

Chrysler attempted to move upwards with the 300 and the Pacifica, not exactly a raging success.

I disagree. Chrysler had two problems with the 300 and Pacifica that kept them from going seriously upmarket.

First, at the time Daimler owned the company, so they had a vested interest in protecting Mercedes' upmarket status.

Second, while the 300 and Pacifica are fine vehicles, they are not fine luxury vehicles.

I think Cerberus has a lot of work ahead if they want to make Chrysler a serious luxury brand. But the Pacifica and 300 didn't fail to move upmarket because they were Chryslers, they failed to move upmarket for other reasons.

[tripowergto]

I was unfortunately "upgraded" to a new Chrysler Sebring rental this past weekend in SF. What a hideously horrible vehicle!! Cerebus can't kill this model off soon enough!

For all the complaints heard here against the Pontiac G6 it was light years ahead of the much newer Sebring as a rental car.

[Bravada]

Chrysler attempted to move upwards with the 300 and the Pacifica, not exactly a raging success.

Do remember at about the same time they started building cheapo SWB minivans. Besides, neither of the vehicles was particularly good at being upmarket - the Pacifica was ungodly awful-looking with a dash that literally looked "thrown together" and certainly didn't have anything upmarket about it except for the price tag. The LXs aren't that upmarket either with those interiors, and Chrysler could've done a lot better packaging the rather good underpinnings into some more posh gear.

As long as the T&C line lives, you have to advertise it, so it costs all the same, and when you stop advertising, sales will quickly go down too. Making T&C a "trim level" (and would a T&C become a Dodge then???) would the first step to the death of any brand equity in the name.

[roteague]

Originally Posted by Michael_S

The article assumes that 20,000 of the 24,000 people who purchased an Aspen would have just bought a Durango if no Aspen was available.

I'm not sure that's true.

I wouldn't. I like the Aspen, it's only problem is that it needs a much more upscale interior than it has.

If I was in the market for that kind of vehicle and I had a choice between the Aspen and the Pathfinder, I'd choose the Aspen. If I had to choose between the Durango and the Pathfinder, I'd choose the Pathfinder. Exterior styling does make a difference. I feel the same way about the Equinox and the Torrent - I like the Torrent, but would never own an Equinox.

[Bad Diogenes]

Chrysler really needs a product guy, much like Lutz is for GM. Somone that will get rid of the crap, will fix whatever they're going to keep, and, finally, make sure some good new vehicles get walked through the maze of potential dead-ends that exist at every manufacturer.