• Oct 20, 2006
The Chrysler Group is looking for advice from other DaimlerChrysler divisions on how to cut the cost of each vehicle it produces around $1,000 on average. DaimlerChrysler CEO Dieter Zetsche told CNBC in Paris that executives from Mercedes-Benz in particular were helping put together a plan to make the cost cutting happen. The group advising Chrysler CEO Tom LaSorda also includes execs from the company's commercial vehicle operations and some outside consultants.

There are more than a few ways to cut down the cost of the vehicle. Chrysler could close some plants and reduce its excess capacity, a strategy adopted by Ford in its Way Forward plan. Rumors that a Chrysler plant in Newark, Delaware producing the Dodge Durango and Chrysler Aspen could close are out there, which makes sense in light of the automaker's admission it will lose $1.5 billion this quarter because it didn't anticipate the SUV's fall from grace. Chrysler's health care costs for its U.S. workers also adds $1,400 to the price of every vehicle, but the United Auto Workers has already closed the door on giving the automaker any concessions. So where is Chrysler going to scare up a grand per vehicle? Other possibilities include reducing its white-collar workforce, investing in more efficient production techniques, and the last resort, skimping on the cars and trucks it sells by reducing the level of standard equipment offered while holding the price and using less expensive materials.

If Chrysler succeeds, the profit it makes per vehicle would rise from $144 to a margin just below that of Toyota or Honda, the industry leaders in bucks made per vehicle.

[Source: Automotive News]


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  • 20 Comments
      • 8 Years Ago
      #2: Didn't he used to be the coach of the Dodgers?
      • 8 Years Ago
      Back to the good 'ole days of cars without air conditioning, the use of sealed beam headlights in place of the sculpted set, and a 2.5 watt per channel analog AM/FM radio without cassette. :D
      • 8 Years Ago
      'Reducing the level of standard equipment offered while holding the price and using less expensive materials'

      Decontenting for a manufacturer in trouble is not an option. Toyota and Honda do it all the time, but their brand-image/rep. allows them to. My Honda dash is pure plastic and I was shocked recently to drive in Hyundai Santa Fe that made my Honda look cheap in more than dash appearance and ergonomics.
      Chrysler has no other choice but to cut peripheral to their vehicles or they will lost another $billin a quarter.
      • 8 Years Ago
      Let the damn UAW go on strike... then hire non union workers, with good benefits, and not with overpaid benefits that members from other unions don't ge any how. Damn the UAW.

      Or, close a plant, let the union members rebel against their own union.
      • 8 Years Ago
      The real joke about this article is that the Germans are supposedly teaching efficiency to Chrysler. I think Zetsche is letting nationalism get in the way of reality.

      Here in Michigan where there is a auto engineer on every block, it was not secret that when the “merger” took place between Chrysler and Mercedes that it was Mercedes that was going to learn a lot about the efficiency of Chrysler’s engineering and assembly processes. It was well known that Mercedes took a multitude many more hours to build an equivalent car than Chrysler, plus Chrysler was then designing new cars in as little as 18 months, not the years that took many of their competitors.

      There is a reason why Mercedes specializes in luxury. They could not compete in cheaper cars with the rest of world.

      Say anything you want about these two brands, but efficiency has never been Mercedes specialty.
      • 8 Years Ago
      Cut the benefits to the union workers. Let them have the right to strike. While they are on strike, they will not:

      1) build cars that cannot be sold anyway, so the glut of 200+ days of supply will ease out.

      2) cost anything. As opposed to the guaranteed job bank shenanigan, striking workers are paid by the union.

      When it's time to negotiate, they can restore partial benefits.

      Everybody wins!
      • 8 Years Ago
      Easy. Get rid of all the glass except the windshield, get rid of all the seats except the driver's seat, leave off the rear doors, no radio, no carpet. That should be about $1000 worth. At least everyone will know where the cost-cutting took place.
      • 8 Years Ago
      Tom Lasorda? All of a sudden I want pasta....
      • 8 Years Ago
      Please, Chrysler, don't make your interiors any more chintzy than they already are.
      • 8 Years Ago
      Me, a union basher? No, I am a UAW basher. Most unions out there do some good, but the UAW for the last 10 years has done more harm than good. Yeah, its Ford and GM's fault for being in the position they are now, but admit it, the UAW had at least a small part in it.

      The UAW is crap! They don't care about their own union members, they are just arrogant idiots with a huge ego.
      • 8 Years Ago
      Take it right out of the soon-as-a-car-is-introduced incentives!!!!
      • 8 Years Ago
      dosen't people know that the unions get a raise, then so do the non-union employees, give me a break please, i am retired from ford mtr co, i can say that i could go home at night and get a good nights rest for the job i did that day. thank you. ernie.
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