More Changes for Chrysler from New Management

Chrysler underwent bankruptcy and restructuring this year after receiving federal dollars to keep it afloat while a deal with Italian automaker Fiat was negotiated. Now owned and managed by Fiat, the new Chrysler is expected to shed some old models as Fiat attempts to turn Chrysler back into a profitable company.

In a Toledo, Ohio Jeep factory, there is worry that one model they make will not survive the cut, and workers are worried about losing their jobs. They make the Dodge Nitro and Jeep Liberty, and Nitro sales have been dismal, down to only 11,000 units this year. Sales figures for the Jeep Liberty have been even more abysmal; selling at 41% less than last year. However, the fear is that the Nitro will be cut in order to focus on the Liberty model.

Sergio Marchionne, Fiat SpA CEO, now controls Chrysler and has been developing a plan for making the changes he feels are necessary, including getting rid of redundant models and replacing them with the smaller Fiat models. There has been unofficial word that the plan could be formally announced around the time of the Frankfurt, Germany auto show, which takes place beginning September 15.

Marchionne has ordered a list of model cuts from U.S. executives in order to put a stop to overlapping in the model lineups. His aim is to have each car or truck model sold under only one of the three brands, Chrysler, Dodge or Jeep.

At another Chrysler facility in Kokomo Indiana, 1,800 workers make transmissions for many Chrysler models including the Nitro. The employees worry that Fiat transmissions will be used instead of the Chrysler transmissions they make and that models that aren’t faring well (like the Nitro) will be cut.

There is speculation that in addition to the Nitro, one of Chrysler’s minivans may also be on the way out. A similar fate may befall the Jeep Compass and either the Chrysler Sebring or the Dodge Avenger.

Auto industry analyst from IHS Global Insight, Aaron Bragman, says that the model overlap must be done away with in order to place Dodge, Chrysler and Jeep together in all of Chrysler’s remaining dealerships. He says, “There has to be elimination. They do have too much product overlap. Now that you’ve got all three brands in the same showroom, it’s even more glaring.”

Of course, slimming down the product lineup and streamlining the company will save millions, which is what will be necessary to keep Chrysler in business. Chrysler and Fiat intend to build Fiat subcompacts and compacts in the U.S., which likely means the use of Italian hardware for those models.

However, Chrysler spokesman Rick Deneau says that he is unaware of any specific plans to shed more models and contends that no plans have been finalized yet. Deneau says that they are not focusing on the subtractions from the model lineup, but on the additional models that could be produced domestically in the future.

Posted in In the News

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