Officials for the re-emerging Chrysler tout platform sharing and product makeovers as the quickest way to jump-start business—and lead the automaker back to profitability.
"The product portfolio is getting a major overhaul," said Sergio Marchionne, CEO of Chrysler Group LLC. Management team members recently outlined the automaker's 2010-2014 business plan to the media, analysts, supplier executives, and the Chrysler dealer council. Marchionne labeled the plan "comprehensive, ambitious, and serious."
In 2013, the automaker plans to have 28 U.S. nameplates built off unique Chrysler Group platforms as well as numerous shared platforms with the Fiat Group, which holds a 20% equity interest in the American OEM.
"We're going to add entries in the A and B segments by sharing a platform with Fiat, so we'll engineer a product for North America off an existing platform that Fiat has," explained Scott Kunselman, Senior Vice President-Engineering for Chrysler Group, in an interview with AEI.
"In the C and D segments, we will share a new platform and engineer cars for Fiat and for us off that platform, and take advantage of the volume leverage that comes with that," he noted.
Volume leveraging of the C and D platform architecture means Chrysler and Fiat can share major subsystems including HVAC, engine cooling modules, and steering and fuel systems, while modifying other systems such as the powertrain, instrument panel structure, and front and rear suspensions.
"Component sharing creates new opportunities across global platforms," said Dan Knott, interim head of purchasing for Chrysler Group. He expects that an aligned Chrysler-Fiat group purchasing organization can achieve $2.9 billion in cumulative savings from raw materials during the five-year period.
The aggressive product plan has dramatically increased engineers' workloads, Chrysler officials admitted. The solution has been direct hiring in some areas, combined with adding contract employees and assigning some projects to engineering-services companies.
"I don't want to overly grow my on-role (direct hire) staff and downstream be in a position where I need to reduce (worker counts), so I think we'll focus our on-role growth on very specific technology needs," Kunselman said.
Chrysler Group's primary need is increased sales in the near-term, to maintain cash flow until the Fiat-based product assault begins in MY2012. Marchionne's goal is to achieve a $5 billion operating profit and pay off Chrysler's TARP debt to the U.S. Treasury by 2014. An IPO public stock offering also might come but not before 2012, Marchionne told the audience.
An all-new Jeep Grand Cherokee developed under Cerberus management is on route as a 2010 model, as are a significantly refreshened Chrysler Sebring sedan and Town & Country minivan.
"About the only thing that won't change on these vehicles (coming in 2010) is the bone-bones architecture," said Joseph Veltri, Chrysler Group's Vice President-Product Planning. Chrysler Group's entire vehicle lineup will be refreshed or renewed by 2012, he said.
Three all-new Jeep vehicles, including a B-segment entrant, will arrive in 2013 on Fiat-derived platforms. A midsize Chrysler crossover vehicle as well as a B-segment car and a replacement for the Chrysler Sebring/Dodge Avenger also arrive in 2013 on Fiat-derived platforms. Marchionne said the timeline for production launches is "phenomenal," given the amount of engineering work that needs to be done.
Excluding full-size trucks, the Chrysler Group currently uses 11 different vehicle platforms, but in the short term, the number of platforms will drop to seven—"three of which will be shared with Fiat and four of which will be unique to Chrysler," said Kunselman.
A midsize, unibody truck is under production consideration, while all-new large and small commercial vans are approved for 2012 production, according to Veltri. And the company is "giving serious consideration" to entering the heavy-duty (Class 8) truck market, according to Fred Diaz, President and CEO of the Ram brand and Lead Executive for U.S. Sales.
Dodge last produced a Class-8 truck in the 1970s. A new entry would be based on Fiat's European truck line.