Chrysler stays with output plan
Automaker ensures suppliers can meet production needs
Photo credit: JOE WILSSENS
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EDITOR'S NOTE: This article has been corrected to clarify that Chrysler is forecasting industry sales in the United States this year of 12.7 million units, and its own global sales at 2 million.
Despite softening industry sales this summer, Chrysler Group is sticking with its production plans for the rest of the year.
Chrysler previously had forecast U.S. industry sales of 13 million to 13.5 million units this year. The automaker still expects sales at the lower end of that range, purchasing chief Dan Knott said Tuesday at the seminars here.
Knott said he has spent the past three months canvassing suppliers to ensure they can meet their commitments to Chrysler even if other customers - such as Toyota, Nissan and Honda - ramp up production to rebuild their inventories.
Now that the Japanese automakers are raising production, Chrysler is sticking with its total U.S. sales forecast of 12.7 million units this year. The automaker expects to sell 2 million units globally in 2011.
"We hit our number last year, and we're going to hit our number this year," he said. "I don't think we were smoking dope when we put [our projection] together. We are basing it on solid fundamentals."
Chrysler launched 16 new or reworked models in the 2011 model year, and the company only now is enjoying the full benefit of those introductions, Knott said. In July, Chrysler's U.S. sales rose a healthy 20 percent from July 2010 to 112,026 units. The entire U.S. industry rose just 1 percent in July.
This year, dealer inventories are strong and Chrysler's marketing program is creating buzz.
In 2012, Chrysler expects to sell about 2.3 million units, while industry sales are projected to be 13.8 million units.
In other news, Knott said:
• Raw material prices will continue to rise this year, and Chrysler will compensate suppliers for those increases. But the automaker is asking suppliers to improve productivity to offset at least part of the cost.
• Chrysler and Fiat are starting to merge their purchasing operations. The two companies will share two-thirds of their suppliers by 2015. Chrysler expects its network of 1,100 suppliers to shrink somewhat but has not set targets.
• Chrysler expects direct purchases from suppliers will total $41 billion this year, up from $31 billion in 2010.
• Chrysler will ask five to 10 suppliers to adopt its manufacturing productivity enhancement program, dubbed World Class Manufacturing, later this year.
You can reach David Sedgwick at dsedgwick@crain.com.
