Chrysler is getting a bit of flak over its petrol incentive: by buying a Chrysler, the company will lock in a price of US$2·99 per gallon of petrol for the next three years. Conditions apply.
   The very valid criticism is that Chrysler does not have many fuel-efficient cars. They are, really, not that well made, their interiors look cheap and the Chrysler Sebring and Dodge Caliber aren’t the prettiest. In fact, Chrysler’s smaller cars look out of step, which is a far cry from how the Sebring and Dodge Stratus looked at the turn of the century.
   But this isn’t due to the fault of the Americans, but from the previous German owners, Daimler-Benz AG. As I have said for nearly a decade, that company never understood the Chrysler brands, and Plymouth is no longer around for the price-leading consumers.
   Daimler missed the massive opportunity of using the Smart ForFour and Mitsubishi Colt platform and turning it into the Chrysler Java; it had no idea how to manage a portfolio of passenger-car brands. The marketing-led tactic alone cost Mercedes-Benz itself terribly.
   Lutz and Eaton had Chrysler lean and mean prior to the takeover, with US-record development times, coordinated R&D teams (has this competence been lost?) and an appealing product line—even the compacts. The Swabians came in and all the heads of department left, Plymouth was canned, and both Chrysler and Dodge ignored the lower end of the market. It was the Mercedesing of Chrysler cars, and the most positive legacy, apart from some old Mercedes platforms, is the Sprinter van. Hardly enough to build a success story on—when the DaimlerChrysler group had access to plenty of lower-end technology through tie-ups with Hyundai and Mitsubishi.
   I have doubts that those in strategy could not have foreseen the oil crunch during the late 1990s, not examining sociopolitical trends, but simple cycles. Maybe I am showing off, because I did foresee it. I also said in 2000 that Chrysler urgently needed a compact line. It was a sure sign that Detroit hadn’t learned from the 1970s, but the Japanese were primed with the Honda Insight and Toyota Prius, not to mention the Scion brand.
   On the other hand, things were strong for trucks, SUVs and big cars. It would have been equally silly for those sectors to not be fielded as American consumers went for the politically incorrect Dodge Durangos, Ford Excursions and Chrysler 300s. The US got efficient on most measures—except fuel consumption, which went backwards over the last 20 years of the 20th century. But another cycle was that even in the 1970s, big cars were selling, even if their market share was down.
   If that earlier wisdom holds, then there will be enough buyers who’ll say: we still want to buy a large car or truck, for whatever reason. Of course Chrysler sales are down across every division. But for those who might have to consider a large car for practical or egotistical reasons, then a $2·99 per gallon cap is not as bad an idea as the motoring and business press are making out.
   Short of rebadging some Mitsubishis as it had done in the 1970s and 1980s—and which remains an appealing idea given Mitsubishi’s subcompact line not sold in the US—Chrysler is product-poor down the bottom end. It says it has a hybrid truck coming for 2010, but at the end of the day, that’s just another big, politically incorrect vehicle.
   Yes, Chrysler needs to develop compacts, quickly. It should do it via captive imports for now. The Chinese deal cannot come soon enough. But in the meantime, the petrol incentive idea will help it—and it’s the only logical tactical place to run to right now. Posted by Jack Yan, 03:00  permalink

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