It Is The Product, Smart Guys!
Jerry Flint, 01.22.08, 6:00 AM ET
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The latest version of Car & Driver's 10 Best Cars list includes three vehicles from General Motors (nyse: GM - news - people ), but none from Chrysler (or Ford Motor (nyse: F - news - people ), for that matter).
A recent comparison of nine new, small sport utility vehicles in Car & Driver's February 2008 issue ranked the next generation Jeep Liberty last, behind SUVs such as the Hyundai Tucson and Suzuki's (other-otc: SZKMF - news - people ) Grand Vitara. This is an embarrassment for a nameplate synonymous with SUVs.
Jeep is one of Chrysler's crown jewels, and the company tried to broaden the Jeep lineup with two less-expensive and less-rugged vehicles based on a car platform. Of the two, the Patriot and Compass, the latter has received the harshest criticism. However, even the mainstay Jeep Grand Cherokee rarely receives much praise from auto testers.
The Dodge Caliber, while distinct and good-looking, never wins a face-off, either. Road and Track recently ran a comparison between the Mazda Speed 3 and the Dodge Caliber SRT4 (a new, high-performance version) and ended up saying, "This car is a step in the wrong direction."
Perhaps the worst news for Chrysler comes from Consumer Reports magazine. In an evaluation of family sedans in its latest issue, Chrysler and Dodge pull a hat trick. Those cars are at the bottom of each of the three lists (affordable, mid-priced and large). Among the comments on the recently introduced Dodge Avenger: "Ranks at the bottom of its class ... feels cheap and underdeveloped ... stiff ride, suspension noise, lack of agility ... uncomfortable seats and substandard fit and finish."
Chrysler invented the modern minivan, but car reviewers rarely score its minivans ahead of those from Honda (nyse: HMC - news - people ), Toyota (nyse: TM - news - people ) and sometimes even Kia and Hyundai. This also applies to the new generation of minivans that Chrysler introduced just last year.
All the bad press comes at a particularly tough time: Analysts say the auto market is falling, the competition is pumping out more attractive models and Chrysler is trying to reduce the cash rebates its been heaping on its vehicles. It is no time for sissies.
Today's shortcomings of Chrysler products are not the fault of present management. The company designed these vehicles years ago, while Chrysler was under the yoke of Daimler of Germany. Word is that new Chief Executive Robert Nardelli has instituted fast-track programs to try to remedy some of the most glaring problems with Chrysler's current lineup.
That aside, I find big problems with the new Chrysler management team, too.
I hear that Cerberus Capital Management, Chrysler's new owners, had hired Wolfgang Bernhard, one of the top car men in the world, to run Chrysler. Bernhard was one of the executives behind the Chrysler 300 success and for cutting costs, too. Apparently, he walked out when he found out he would not be the boss but was to follow the orders of Bob Nardelli, former chief executive of Home Depot (nyse: HD - news - people ) and alum of General Electric (nyse: GE - news - people ). Prior to coming to Chrysler, Nardelli had no automotive experience.
Chrysler's new managers declared they were losing money on vehicles such as the Chrysler Pacifica crossover and Dodge Magnum wagon and said they would kill them in the near future. The same goes for one of my favorites, the Chrysler PT Cruiser. (Note: Chrysler has said officially that it is killing only the PT convertible, but I am sure that they plan to dump them all). These vehicles are still in production, but it must be hard to sell a car you have declared to be future roadkill. Frankly, I find it hard to see how they could be losing money on these vehicles since they have been in production for years, which means that the company has already paid for their tooling. What these vehicles needed was some sales effort.
Bob Nardelli just put the public relations department under personnel--oops, human resources--and the PR vice president at Chrysler quit. Jason Vines happened to be one of the best public relations experts in the auto business, so his walkout leaves a bad message about this management. Nardelli is also hiring a PR consultant, and that means it will cost them more, not less--we all know about consultants.
Then Chrysler appointed a new purchasing boss, a former associate of Nardelli at the hardware store. Everyone assumes this means the company will be buying more parts from China, where everything is cheap. This is a bad and potentially dangerous move.
What the new crew seems to forget is that the purchasing department worked best at Chrysler when it offered their vendors a fair deal and shared cost savings with suppliers. In those days, Chrysler and the suppliers were profitable.
Chrysler just made a deal with Nissan (nasdaq: NSANY - news - people ) to buy some cars from Nissan's factory in Mexico, and sell them in Brazil and Latin America. I do not expect much to come of this agreement. For starters, Chrysler has little business in these markets and will not gain market share with a re-badged Nissan. There will not be much, if any, profit in this. There is rarely enough profit in a small car to split between two manufacturers. This type of deal rarely works for either company.
Despite all this dumping by testers, I still see positives in Chrysler. Its minivan is good enough to be the best seller, and the Dodge Ram pickup is a terrific seller. The customers are not fools. They know what they like. I think that the Chrysler 300 sedan is one of the best-looking cars on the road and that the Hemi V-8 is a terrific engine.This journalist has seen Chrysler come back from the dead more times than he cares to remember, and he is personally rooting for the company again. That aside, I would feel more confident if Chrysler had more top executives like Jim Press, who knew the business. I wish good luck to Press, who was atop Toyota Motor in the U.S and joined Chrysler last year. As long as he is at Chrysler, I have hope.