Chrysler Admits Faults, Unveils New Plan

If you wanted to see a group of executives perform a public mea culpa, I wish you could have sat next to me today for Chrysler's new business plan meeting in Auburn Hills, Michigan.

The beleaguered automaker, recently out of bankruptcy and now owned in part by Italy's Fiat, admitted faults and promised the future would be different.

The company's head of quality, Doug Betts, explained that problems were systemic.

"When I arrived at Chrysler, there was no definition of quality," Betts said. In one startling example, Betts detailed a period where customer-reported vehicle problems went unresolved. The problems weren't acted on, with Betts saying that the company "did nothing for 71 days." Chrysler promised that a new quality system would ensure those problems don't happen.

What's Changing

Key to Chrysler's plan will be a close sharing arrangement with its new shareholders, Fiat Group (Fiat owns 20% of Chrysler Group LLC now but could have as much as 51% in a few years). A few popular models will be lost in the transition, but many new models will arrive over the next five years.

Dodge
Dodge is splitting its car and truck groups, creating a new "Ram brand" which will focus only on trucks. All Rams will still feature Dodge branding, but those emblems will be downplayed. Ram Brand CEO Fred Diaz told AOL Autos that when customers were asked about what the Dodge brand meant to them, they nearly always responded by mentioning the trucks.

"Dodge was trying to be all things to all people," Diaz said. Now, he said, the cars can grow on their own and the trucks can get unique Ram branding. All dealerships will sell Ram trucks.

In addition to this split, expect the following:

Going Away:
- Dodge Viper: Gone in the summer of 2010, while company officials say a return in 2012 is under consideration
- Dodge Caliber: Dead in 2012, but a vehicle of a similar segment is set to arrive around the same time
- Dodge Dakota: Wound down in 2011, but a new mid-size truck using a unibody construction will arrive around the same time

New products:
- A new small car, in partnership with the Fiat Group, in 2013
- Charger: All new Charger is expected in 2010
- New mid-size truck: Under construction for a 2011 launch in a unibody construction
- New large commercial van: 2012
- New small commercial truck: 2012, shared from the Fiat Group
- Potential for long-term focus on the commercial truck market

Undefined:
- NASCAR: Ram Brand's support for the NASCAR Craftsman Truck series isn't known right now, but Ram's Diaz says he personally feels like it would be a good match. Dodge's support of the Challenger in NASCAR is secure, at the Sprint Cup level and Nationwide level next year.
- Hybrids: Hybrids will likely be a part of the Dodge cars, but not a part of the Ram brand plan right now, but could be. Diaz indicated that the jury is still out when it comes to fitting hybrid powertrains into trucks; quite simply, he's not sure truck buyers want them right now, but says that could change down the road.
- SUVs: With Ram becoming a truck-only brand, one might imagine that full-size trucks will be a part of the Ram brand (as GMC does -- it only sells trucks and SUVs). Diaz says SUVs will stay with Dodge car, though, and not be a part of the Ram brand.

Jeep
Jeep is positioned to become quite a jewel in Chrysler (and Fiat's) crown, but it has a ways to go. The high time for the brand was the 1990s, when they sold 629,000 models with only 3 models; in the new millennium they expanded the model lineup to seven but sales actually dropped by over 150,000 units. Clearly, the strategy failed.

But the future of Jeep looks bright, with the Wrangler rightfully positioned as the centerpiece. Among the other changes:

Going Away:
- Jeep Compass and Patriot: Will be consolidated into a new vehicle that will debut in 2013. Until that time, both vehicles will undergo "major modifications" next year
- Jeep Commander: Going away as of the end of 2010, with "international reallocation" for the vehicle occurring around the same time. This could mean that the Commander would live on in a different country with different equipment.

New Products:
- Jeep Wrangler: New diesel model in the end of 2010
- New Small SUV: 2013 launch, appears to be even smaller than the Patriot and Compass and will likely be imported from Fiat.
- New small crossover: 2013 launch, consolidating both the Compass and Patriot, imported from Fiat.
- Jeep Liberty: Will be replaced by a Fiat product in 2013, but will likely carry on the Liberty name
- Jeep Grand Cherokee: New model debuts in the end of 2010 as a 2011 model

Undefined:
- Jeep could become a key way for Chrysler and Fiat to export more products around the globe, but those plans were not discussed today.

Chrysler
Chrysler, which debuted a new logo, is set to return to the notion of American excellence. The brand's CEO is eager to debut a new marketing campaign, a new website and new catalogs, all in an attempt to reposition Chrysler as an American icon.

Going Away:
- PT Cruiser: The retro city car will wave goodbye in the end of 2010

New Products:
- 300: There's a new model coming in 2010
- New small car: A new Fiat-sourced product will arrive in 2013
- PT Cruiser replacement: A C-segment vehicle, sourced from Fiat, will replace the PT Cruiser
- Midsize crossover: A new midsize crossover vehicle will launch in 2013, sourced by Fiat
- Town & Country: A new Town & Country will launch in 2014
- Special models: Special models of the 300, Grand Caravan and Sebring will launch early next year
- Mid-size sedan: A replacement for the Sebring is scheduled to appear in the latter part of 2010

How Fiat Helps Chrysler

While once great, Chrysler, Jeep and Dodge were starved for products and the technology within their vehicles became dated. Ironically, Chrysler and Dodge are brands that were built on great engines and great technology. Jeep, while never a technical powerhouse, was nonetheless considered technically sophisticated for its decades-long reputation for off-road capabilities. In light of these brand hallmarks, it makes all the sense in the world for Chrysler's brands to receive a shot in the arm for technology. And that's exactly what Fiat is going to deliver.

Fiat's expertise in powertrain technologies, such as diesels, turbochargers and direct injection will start appearing in Chrysler, Dodge and Jeep products very soon. In fact, if you look at the engine plans for the three brands over the next five years, you see more Fiat-sourced powertrains than American powertrains. In addition, Chrysler will introduce the small Fiat 500 in North America. It will launch in "key metro areas" and at select dealers throughout the country. It's possible that the brand might not even display the Fiat logo (nor will it carry the Dodge, Jeep or Chrysler logos) and instead create a brand new 500 logo unto itself.

So, is this a good day or a bad day? If you're a fan of Chrysler, Dodge and Jeep brands this is undoubtedly a bright day. If you're an owner of one of the models going away, though, it's bittersweet. The company will live on but in a different form. But, finally, Chrysler has a teammate that wants -- no, needs -- to see increased global growth and is willing to act like more of a partner in the future. This is different from Chrysler's previous link up with Mercedes-Benz

"Mercedes really couldn't use anything they got out of Chrysler," said Jim Hall, an analyst with 2953 Analytics in Birmingham, Michigan. "The water really didn't flow from America to anything of value for Mercedes. But now, Fiat gets the company for a song, gets them the volume they need to maintain critical mass purchasing and the ability to sell Jeep around the world. It's win, win."

It's the first day of the new Chrysler. There are many more changes to come, we expect, and more products and concepts to see, but leaving today's meeting we feel more confident in the company than ever before. Andiamo!

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