Thursday, June 14, 2007

Chrysler will alter its image

With German link gone, automaker is embracing status as an underdog

By Jeff Bennett
Bloomberg News Service

Chrysler plans an advertising campaign to tout the automaker's ``underdog attitude'' as DaimlerChrysler AG is split up, North American sales chief Steve Landry said.

``What we really want to do is portray ourselves as a good ol' North American company that has really done really well over the years, fought through many battles and will survive once again,'' Landry said.

Separately Wednesday, Chrysler said it will invest $450 million to upgrade a Wisconsin factory as part of a plan to return to profit by making more fuel-efficient vehicles.

The plant in Kenosha will build Chrysler's new, six-cylinder ``Phoenix'' engine starting in January 2011. The plant will employ 700 full-time workers and have a capacity of 400,000 engines a year.

Chrysler is spending $3 billion to build new engines, transmission and axles as it works to stem a 2006 loss of $680 million.

The investment reflects a ``long-term commitment to new vehicle components that support consumer demand for refined, economical-to-operate vehicles,'' Richard Chow-Wah, vice president of powertrain manufacturing, said in a statement.

Chrysler's advertising and marketing decision under new owner Cerberus Capital Management LP is a departure from last year's ``Dr. Z'' ads, in which DaimlerChrysler Chief Executive Officer Dieter Zetsche trumpeted the quality of German engineering.

``Their buyers want an American vehicle, not a German vehicle,'' said analyst Rebecca Lindland of Global Insight Inc. in Lexington, Mass. ``Walking away from their blue-collar American roots is what got them in trouble in the first place.''

Cerberus agreed in May to buy an 80.1 percent stake in Chrysler for $7.4 billion, ending a nine-year merger with the former Daimler-Benz AG. Chrysler, long No. 3 in U.S. sales, has slipped to fourth place as Toyota Motor Corp. has gained market share.

Chrysler's ad campaign will focus on newspapers and the Web, said Landry, who didn't disclose the cost or the ads' content. ``We got to be careful not to wrap ourselves in the American flag,'' he said. ``It's that whole underdog attitude that we want customers and potential customers to see.''

The Dr. Z ads failed to stem a sales slide at Chrysler last year. DaimlerChrysler eventually dropped the campaign.

Cerberus is starting to explore operations at its new investment, according to Landry. The New York-based private-equity firm has asked whether Chrysler can accelerate a program begun last year to thin the ranks of U.S. dealerships, he said.

``We are still on a fast track to reduce the number of dealers, and the question has been, `With more investment, can you do it faster?' '' Landry said. ``The answer is, `With more investment, it can be done faster.' ''

Chrysler had 3,750 dealers at the start of 2007. Some are volunteering for buyouts by other dealers, while the automaker has asked others to make the acquisitions, Landry said. Chrysler is providing incentives, which it hasn't detailed, to help with the purchases.

The automaker is offering more fuel-efficient vehicles this year as gasoline prices rise, which will help Chrysler sell more cars, Landry said.

Chrysler relies on light trucks -- pickups, sport utility vehicles and minivans -- for about three-fourths of its U.S. sales, the most among major automakers. Chrysler last year sold 510,234 cars, a 3.1 percent drop, and 1.63 million light trucks, down 8.2 percent, according to data compiled by Bloomberg News.

``We want to finish June really hard in terms of a deal standpoint,'' Landry said. ``Then in the month of July you will see a lot of brand. We will focus 100 percent TV on the Dodge, Chrysler and Jeep brands. We want people to get a feel what Dodge, Chrysler and Jeep mean instead of, `Everything is on sale.' ''

The automaker also is changing Dodge's slogan to ``Grab Life'' from ``Grab Life by the Horns,'' to appeal to the increasing number of women buying its vehicles. Jeep's new slogan, starting in August, will be ``Have Fun Out There.''

Landry said he is pushing for Chrysler to continue reporting its monthly sales figures. No formal discussions have taken place with Cerberus on that issue, he said.

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