Can a New Product Strategy Save Chrysler?

Last Updated Aug 24, 2007 12:15 PM EDT

dodge.jpgNow that Chrysler is privately owned, executives can focus on the long-term without worrying about reporting quarterly or annual profit-and-loss statements. Some skeptics are questioning, however, whether new CEO Robert Nardelli ("synonymous with corporate excess") has been charged with turning the company around or merely protecting Cerberus' investment. If he's interested in the former, a good start would be to revamp Chrysler's product strategy.

Although Chrysler's had some well-made, popular models, like the Dodge Ram pick-up, the company's been slow to upgrade, which may have contributed to decreased domestic sales. This excerpt from Bloomberg addresses the company's tendency to "ride winners too long without upgrading their designs":

A case in point is the PT Cruiser, which was introduced in 2000 and immediately found enthusiastic customers that liked its throwback styling, reminiscent of a 1930s hot-rod, and its compact sport-utility functionality. Chrysler has sold more than 1.2 million of them...On Aug. 14 Chrysler said it will build the current PT Cruiser for "at least'' another year. No word on a replacement.
Nardelli's known for a lot of things (Six Sigma credentials, for one) but product knowledge in the automotive industry isn't one of them. Erich Merkle, an auto industry analyst with IRN Inc, questioned his abilities:
"This is an interesting choice, and I'm somewhat perplexed by it. There are still things that Chrysler needs long term and I'm not sure Nardelli can provide them...what happens four to five years from now. When you get these kinds of management upheavals, what happens to product development?"
Chrysler needs a return to innovation, like the days of Lee Iacocca when the company invented the minivan, revived the convertible, and popularized the SUV. Does Nardelli have what it takes to not only make the books attractive for Cerberus but to also make models attractive to consumers? And more importantly, is that where he's focused?

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