• Aug 24, 2010
Sergio Marchionne harbors no illusions about Chrysler being in the black for 2010. The Detroit News reports the Chrysler chairman and Fiat CEO stated flat out that a net profit in 2010 isn't likely during an August 23rd tour of a Toledo Jeep plant. Despite recent reports of operating profits from Chrysler, there's still tremendous cost associated with loan interest payments and a lineup of moribund product to turn over. Add to the mix the reintroduction of Fiat automobiles to the U.S. market, and you've got an outlook that's best described as "challenging."

Still, Marchionne told U.S. Vice President Joe Biden, also in attendance, that Chrysler is "ahead of plan" during the tour. That plan includes paying back its $12 billion in governmental loans and launching the Fiat 500 in North America. A meeting on August 30th will lay out the requirements for dealers interested in Fiat stores, and Marchionne reports strong interest.

Dealers that choose to take on Fiat must create standalone showrooms for the brand, requiring significant investment, though there's little overlap between Fiat and Chrysler product lines to muddy sales efforts. Other rumors that Marchionne dodged were talk of a Jeep Liberty-based SUV to be built in Toledo, and whether or not an Alfa Romeo sedan will be built in Brampton, Ontario.

[Source: Detroit News]


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  • 23 Comments
      • 4 Years Ago
      Hard to be profitable with little new product, and Fiat not expediting the product renewal.
        • 4 Years Ago
        Shiftright: There have already been big changes at Chrysler factories in order to improve the working environment, employee productivity, the quality of completed product, etc.etc... morale is way up, and the ground-level workers are being taught a wider variety of tasks and have fewer layers of management to deal with. Good stuff all around. Fiat calls this process "World Class Manufacturing", and it's the same basic set of changes that got Fiat turned back in the right direction a few years back.

        Here's one article on the topic from last year:
        http://wot.motortrend.com/6573819/industry-news/fiat-institutes-strict-efficiency-program-at-chrysler-plants/index.html
        The topic of WCM comes up on a fairly regular basis in the Windsor/Detroit area newspapers but doesn't really see widespread coverage on Autoblog or other places like that.

        Now, I'm not trying to claim that all is well and rosy now at the Chrysler plants... there's still lots to be done at the two Ontario plants:
        http://www.cbc.ca/canada/windsor/story/2010/07/03/ont-lewenza-caw-fiat-factory-visit.html

        Another interesting point to consider -- Marchionne may be the head of a large international organization based in Italy, but he grew up and was educated in Ontario, which is the heart of Chrysler Country. You can't be a successful businessman in Ontario without knowing the importance of Chrysler to the economy. That's why I have some faith in Marchionne to do well with the business -- he's not some disinterested golfist in a suit, parachuted in from thousands of miles away to wave his arms around while the front-line workers roll their eyes. He's got proper credibility.
        • 4 Years Ago
        It takes time to adapt Fiat platforms and powertrains to Chryslers and Dodges.
      • 4 Years Ago
      Marchionne is going to find out rather quickly that running two separate manufacturing and distribution networks is a royal pain in the a**. He really should consider merging Fiat and Chrysler right off from the get go. Let each brand manufacture and sell what it does best.

      Fiat should be selling all midsize, compact, subcompact and minicars.
      Abarth and Lancia could offer sport and luxury upgrades of Fiat products.

      Dodge would take over with the Charger, Challenger and even the Viper as well as the trucks. Lose the Ram brand altogether.

      As for sport/luxury Alfa Romeo should be offering its full line-up to replace the sad and moribund Sebring & Co. offerings.

      Chrysler 300 should definitely move upscale to top off the Alfa Romeo line. The new 3.5 V6 would be perfect here, but a stretched version should offer the Maserati 4.2L V8.

      Then Maserati and Ferrari could offer more exotic products for the excessively wealthy.

      There it is. No overlap or redundant products, or costs of development, or additional advertising budgets. No need to open separate dealerships. Everything is rolled up into one really tight, easy and manageable business plan. When you're only pumping out 2 million units annually, that is all you need...and Chrysler has a wee bit of a struggle to get there yet.

      Or maybe he just likes to spend money trying to manipulate and peddle as many brands as GM or VW. Old ways die hard, don't they?
      • 4 Years Ago
      Does Dan Roth actually cover the automotive world on a regular basis, or just when he's bored and has nothing else to do? Moribund product? Has he seen the new Ram 1500 or Grand Cherokee? The Journey is a nice car, even the Caliber looks good. I see a ton of Calibers and Journeys on the road. Not to mention the other Chrysler and Jeep vehicles like the Wranglers, 300s or minivans (that still bring in the customers). The lineup is nice. Dan...you're killing me here. Get up from your keyboard, put down that IPhone, and come join the real world. Go down to a dealership, get in and test drive some cars.

      If Marchionne wants success he needs to advertise, advertise, advertise, and hit three areas for the U.S. consumer: ONE, Chrysler is alive and kicking, not going belly up; TWO, look at the great cars/trucks ACROSS THE BOARD! Highlight the awards the vehicles have garnered and show consumers the entire product line (not just Grand Cherokees and Rams); THREE, hammer home that quality isn't an issue, and that Dodge/Chrysler/Jeep/Ram vehicles are just as good as anyone's.
      • 4 Years Ago
      Well it shows they are putting a ton of resources into product development; so it will hopefully pay off big time for them.
      • 4 Years Ago
      Maybe if they put the 200C in production they would see huge increase in sales.
      • 4 Years Ago
      Profit unlikely until Q2 2011, but breaking even is probably viable by year end.
      • 4 Years Ago
      SHOCKER!
        • 4 Years Ago
        Once again John, you show that not only are you totally clueless about this company and their products, but apparently you don't know much about business nor accounting either.

        You complaint and moan about their lack of products as the reason for the loss, but yet they are showing an operating profit, meaning they're actually making money on manufacturing and selling vehicles.

        If you're going to comment and try to make fun of something, at least try to have a slight clue as to what you're talking about.
        • 4 Years Ago
        I know!

        Who'da thunk tarnished brands with iffy quality and no new product would post continuing losses?
        • 4 Years Ago
        @ John H.,

        HAHAH OMG! So true, right?

        I laugh so hard when people stick up for Chrysler/Dodge cars, saying "hey my dodge's quality is amazing!" or "Chrysler is pure luxury!".

        Correction: Ferrari is PURE luxury. Lamborghini is PURE luxury. Masarati is PURE luxury.

        Don't compare your mediocre temporarily-shiny interior to the ever-lasting hyper-quality that is Ferrari/Lamborghini/Masarati.
      • 4 Years Ago
      Come on, new product!
      • 4 Years Ago
      To say that Chrysler has, and continues, to face may challenges is an understatement. But I believe Sergio Marchionne is in the right place and the right man for the job. Like many of you I'm eagerly anticipating the company's newest offerings ... both soon to arrive and those planned for the future.

      The work continues but I'm also confident Chrysler will soon return to profitability. And who knows, maybe some of you will be putting down some of that hard earned cash when the folks in Auburn Hills announce their IPO.
      • 4 Years Ago
      I can't see a businessman setting up an entire operation to sell just the Fiat 500. Perhaps this reveals Fiat's "real plan": to use the Chrysler distribution system to stock a full range of Fiat models?

      Assuming Fiats are competent cars, we already have so many other choices. What would make Fiat stand out in an already crowded marketplace?
        • 4 Years Ago
        I agree that the 500 has a lot of character and is probably very fun to drive, but I also find it hard to justify setting up an entire showroom to sell it. I spent 3 weeks in Italy recently and saw plenty of 500s. They are attractive and probably fun to drive but nothing special overall. The 500 will have also have to fight for sales against the Mini Cooper and new Ford Fiesta. I wish Fiat could bring over more than one new car so that the 500 didn't have to fight alone.
        • 4 Years Ago
        The same thing that sells all cars LOOKS. I love how people love to knock a car that they have never driven much less seen! Quit living in the past and live a little in the present!!!!
        • 4 Years Ago
        All other things being equal or close, it's character and design that set cars apart, and in this case the 500 has loads. It's a boutique item like an iPod or iPhone, but inexpensive and classless like the original 500 and Mini, but also offering practical aspects like great fuel efficiency.
      • 4 Years Ago
      Wow, thanks, Captain Obvious..
      Also I wonder what kind of visual aids were needed to get Biden to understand what Marchionne was saying?
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