Automaker vows to overhaul its vehicle development after Nitro, Sebring miss mark.
Josee Valcourt / The Detroit News
High and lows
Consumer Reports on new Chrysler products:Chrysler Sebring/Dodge Avenger
Dodge Nitro
Source: Consumer Reports Annual Auto Issue, April 2007
Action plan
What Chrysler's doing:Lee
A top Chrysler Group executive said in a recent frank internal question-and-answer session with employees that the automaker seriously misjudged the market in developing the panned Chrysler Sebring and Dodge Nitro last year, and is swiftly moving to improve current and future vehicles.
Answering often pointed questions from employees on Chrysler's internal Internet system, Bob Lee, head of powertrain engineering, acknowledged that many people at Chrysler are "outraged" over the issues with the Sebring sedan and Nitro SUV, according to a copy of the Q&A obtained by The Detroit News. Both vehicles received highly critical evaluations from Consumer Reports, which is influential with car buyers.
Chrysler CEO Tom LaSorda and Chief Operating Officer Eric Ridenour are "quite upset" and agree the company "missed where the market was to end up versus our projections," Lee wrote.
Chrysler underestimated competitors, set standards too low in some areas and was not where it needed to be in areas such as fuel economy, interior quality, and limiting noise and vibration.
"As a result of these embarrassing 'misses,' there are extremely aggressive actions being taken on many of the existing products -- and also the yet to be introduced products to get us at least to the middle of the competitive pack in very short order," Lee wrote.
Chrysler spokesman Rick Deneau confirmed the authenticity of the employee Q&A -- posted in the past week -- and said it was meant to be seen by a relatively small group of employees.
While Lee said the issues surrounding the Sebring and Nitro -- two of 10 products Chrysler launched last year -- have sparked a series of deep dives into its processes and standards, the automaker had already started revamping its product development system.
In an interview Thursday, Frank Klegon, Chrysler's product development chief, outlined several actions being taken that should improve existing cars and trucks and new models that will be launched in the next couple of years.
"We're certainly not satisfied with where we are," Klegon said. "We have to get better."
Chrysler is counting on its new models to bolster sales and market share as the automaker restructures to restore profits. After losing $680 million last year, the soon-to-be-sold Chrysler reported $2 billion in red ink for the first quarter and doesn't expect to be back in the black until 2008. Through May, sales of Chrysler, Dodge and Jeep brand models are off 1.5 percent.
Chrysler began working with ASI Consulting Group in Livonia about 18 months ago. The firm, which previously worked closely with Hyundai Motor Co. to improve its vehicles, has helped Chrysler use a system called "Design for Six Sigma" to help engineers better determine upfront what features and qualities customers want in new vehicles.
The firm was hired to help "make a cultural change to move that needle to be proactive," Klegon said. "We're taking this on as an extreme change in the way we do predictive quality from the standpoint of customers. It's embedded in our vehicle teams and it's embedded in our components team."
As an example of Chrysler's proactive approach in responding to vehicle problems, Klegon mentioned noise, vibration and harshness complaints about the 2.4-liter world engine, built in Dundee.
The company found the problem existed only when the engine was cold. Once warmed up, performance matches the Toyota Camry, he said. Now, Chrysler is taking action on the engine and each vehicle that uses it.
Both Klegon and Lee, in his exchange with employees, acknowledged that Chrysler needs to do a better job of understanding where its rivals are headed.
"Our management has admitted that some of our competitors moved faster in some areas than we had anticipated and hence although we matched their previous position and added some improvements, we didn't set targets aggressive enough," Lee wrote. "One example is interior appointments."
Klegon said Chrysler needs to better predict the current benchmark and "where that benchmark might be in two to three years after you bring that vehicle out."
Interiors are particularly important because they are so linked to a consumer's vehicle experience.
"I don't know that the typical person is walking into a Dodge or Chrysler showroom, and saying that the interiors are horrible," said Jack Nerad of Kelley Blue Book. "(But) there's a strong trend to be very careful about interiors, to pay attention to interiors and to do the best job you possibly can to put the investment where the consumer can see it and feel it."
Klegon said Chrysler established a new design studio last year dedicated to vehicle interiors. And although Chrysler is pushing to cut costs by $1,000 per vehicle, interior design won't be compromised. "We're actually adding money into the interior," Klegon said.
To keep costs down, though, Chrysler could tap into its burgeoning supply base overseas for cheaper parts, Klegon said.
While Chrysler has had its share of recent hits with such vehicles as the Dodge Caliber hatchback and four-door Jeep Wrangler, the Sebring, Nitro and other vehicles have missed the mark, many critics say.
The new Sebring was rated 16th out of 16 family sedans recently by Consumer Reports, a particularly tough segment with established cars like the Toyota.
The Sebring and Nitro were both knocked for their interiors, noisy engines and poor handling.
Klegon defended the Sebring as a good car, noting it received no "black circles" from Consumer Reports, which indicate the poorest performance, but acknowledged the "bar is pretty high."
Sebring and Nitro are among several vehicles Chrysler is working to improve.
"We're not treating this any different than a thing that would break that you have to fix," Klegon said. "You have to fix an issue that's in the customer's hands either by design change or process improvements or other things."
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