Chrysler expansion slowed by supplier constraints, Marchionne says
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DETROIT -- The freshly-bearded head of Chrysler Group and Fiat S.p.A. said supplier issues are keeping the automaker from boosting production of the hot-selling Jeep Grand Cherokee and adding 1,100 new jobs in Detroit.
In an exclusive interview with Automotive News on Monday, Sergio Marchionne said he would increase production at Chrysler’s Jefferson North Assembly plant in Detroit “yesterday” if he could.
The automaker announced last week that it would add a third shift at the plant -- which also builds the Dodge Durango and will build portions of a new SUV for Maserati -- but not until 2013.
“I phased in the third shift at Jefferson. I would have turned it on yesterday morning, but I can’t because of the supply base,” said Marchionne, 59. “We run trap lines (studies) on every capacity increase, and we always end up identifying a string of… suppliers who can’t play.
“So we work our ass off to try and bring that number down to a manageable number, but the problem is that if you have one supplier who can’t play, you’ll block the chain.”
Last year, the Jeep Grand Cherokee was the automaker’s second-best selling vehicle with 127,744 units sold, up 51 percent over 2010, and behind only the Ram pickup. On Dec. 31, however, the automaker had only a 33-day supply of its flagship SUV, with many Chrysler dealers asking for additional allotments.
Expanding Jeep
Also during the interview, the Chrysler boss said the automaker will expand the Jeep product line to include a return of the Jeep Grand Wagoneer. The new large luxury SUV will be about the same size as the current Dodge Durango SUV and also built at Jefferson North.
The Jeep brand “also needs a Grand Wagoneer, which we will do. We like that size. We like that upper end. We need to go one level higher than the Grand Cherokee; as large as a Durango, but it needs to have all the refinement, even upscale from the Grand Cherokee,” Marchionne said.
Marchionne said the automaker is considering whether the Durango, as it’s currently configured, would continue to be built alongside the Grand Cherokee at the Detroit plant, or moved elsewhere because of production constraints.
“If Durango stays at Jefferson, then a question of capacity becomes a big issue. But if I have to trade Durango for Grand Wagoneer, I’ll do it,” Marchionne said.
More engines needed
Marchionne pointed to availability issues with the company’s 3.6-liter Pentastar V-6 engine as an example of how its increasing sales have stressed supply chains. The automaker has twin plants in Michigan and Mexico producing the award-winning engine, but with a combined capacity of 880,000 units annually.
The engines power several of Chrysler’s most popular large vehicles, including versions of the Grand Cherokee, minivans, the Chrysler 300 and Dodge Charger sedans, and the Jeep Wrangler.
“But I need 1.1 million engines a year now,” Marchionne said. “We’re going to get [Pentastar production] up to about 1.15 million units, and we just put in some more money to put it over 1.2 million units.”
You can reach Larry P. Vellequette at lvellequette@crain.com.
