Chrysler Group LLC believes it can recreate its image and keep sales at the current level without giving large discounts on vehicles. The company is struggling to erase the idea that it produces low quality vehicles, and believes it can make over its public image in about two years.
Plunging sales have plagued Chrysler for the better part of the last two years. The company has seen its share of the market go from 14% five years ago (according to Autodata Corporation) to 11.4% in November 2008, down to 8.5% this past November.
CEO Sergio Marchionne said this of the situation at a recent news conference: “We have seen our market share gravitate to what I consider to be a natural carry volume for the brand without support, without incentives. I tend to agree that there is a reluctance on the part of the consumer base to come back to the brand. The problem with this is that there is no immediate solution to the rebuilding of brand.”
Over the past year, Chrysler received billions of U.S. taxpayer dollars in assistance and underwent a bankruptcy and restructuring process that was overseen by the federal government. The company is currently managed by Fiat SpA.
A new study done by J.D. Power & Associates reports that one fifth of consumers will shy away from a brand if their future looks uncertain. Chrysler and Dodge are at the top of the list of avoided brands, followed by three of the GM brands that are slated for closure.
Kerri Wise, who is director of automotive research for J.D. Power says, “Brands that struggle with perceptions of reliability can take as long as five years to overcome that. It is definitely hard to change consumer perception. The past performance is really plaguing them.”
Wise says that changing consumer perception is possible, but it takes time. Hyundai, Buick and Volkswagen have improved their reputation for reliability, but it has taken up to five years.
Chrysler CEO Marchionne, who is also Fiat’s CEO, is attempting to turn Chrysler around with customer relations and manufacturing improvements, more balanced supply and demand and a redone product lineup.
He says, My stance is that it cannot be done in less than 24 months. I have every intention of trying to break that record. The company’s new five year plan is aimed at an operating profit in 2010 and breaking even in 2011. Chrysler also has plans to repay all government loans in four years.
Regarding the future leadership of Fiat and Chrysler, Marchionne says that he will not run both companies indefinitely and that a new leadership plan will be implemented in two years.