Chrysler in 2014 closely resembles what Marchionne said it would 5 years ago
Editor's note: An earlier version of this story gave the wrong model year for the 2013 Dodge Dart.
DETROIT -- In late 2009, Fiat-Chrysler CEO Sergio Marchionne and his team laid out an audacious five-year plan to rebuild Chrysler Group.
The verdict is in: It worked.
Today, as company executives prepare to unveil on May 6 a new five-year plan that comes near the fifth anniversary of the automaker's bankruptcy, Chrysler is profitable. Its products and marketing are vastly better. Its dealers are making more money than they have in decades. Sales continue to grow. Neither the U.S. government nor the UAW holds an ownership stake.
There have been stumbles and setbacks, to be sure -- the Fiat brand relaunch and the half-baked Dodge Dart spring to mind. But Chrysler deserves a strong B+ for its performance during the last five years.
Chrysler expended a herculean effort to improve the products it inherited from Cerberus Capital Management and Daimler AG.
The best work was done where it was needed most: vehicle interiors.
Beginning with the 2011 Jeep Grand Cherokee, Chrysler's designers excised the lineup's hard plastic and rat-gray interiors one by one. They placed pleasing, soft plastics almost everywhere a consumer would touch.
They added handy storage spaces, such as under the passenger seat in the Dart, 2014 Jeep Cherokee and 2015 Chrysler 200. They installed a well regarded 8.4-inch touchscreen Uconnect infotainment system in most of the lineup.
|Financial: B+||Dealer relations: C||Design: A-|
|Steady profits now, but margins lag||Stair-steps vex some dealers; Fiat dealers still struggle||Bold risks on Ram 1500, Cherokee rewarded|
|Sales: A||Marketing: A||Purchasing: A|
|Market share was 8.9% in '09; now it's 12.6%||Super Bowl spots are the envy of industry||Trust restored with suppliers|
|Existing products: A||Powertrain: B||Jeep: A|
|Existing vehicles vastly improved||V-6, V-8, diesels, trannies all score; mediocre I-4||Firing on all cylinders; capacity issues paramount|
|New products: C+||Engineering: B+||Ram: A-|
|Miss on Dart; hits with Cherokee, 200||Innovation boosts mileage; small cars, quality lag||Pickups win new customers; ProMaster van slow so far|
|Manufacturing: B+||Dodge: B||Chrysler: B|
|Improved quality and efficiency||Refreshed Durango, Challenger, Charger score||Redesigned 200 promising; 300, minivan redos are overdue|
|Fiat: C-||Overall: B+|
|More product needed for struggling dealers||Strong rebound from bankruptcy|
Chrysler has made great strides with its large cars, crossovers, pickups and SUVs, thanks in large measure to the 3.6-Penta-star V-6 and an eight-speed transmission for rear-wheel-drive vehicles that it licensed from ZF Friedrichshafen.
The powertrain combo gave much of Chrysler's lineup either competitive or class-leading performance and fuel economy, especially in profit-rich products such as the Ram 1500 pickup, Jeep Grand Cherokee, Dodge Durango and Chrysler 300.
Early indications are that Chrysler's experiment in bringing light-duty diesels to its Ram 1500 pickup and Jeep Grand Cherokee is a success and will be expanded to other vehicles.
Chrysler continues to struggle with its chronic weaknesses: small cars, small-displacement engines and overall quality.
The 2013 Dodge Dart is likely one for which the automaker would ask for a do-over if it could. Marchionne acknowledged that the Dart was launched with the wrong transmission, and that he had underestimated North American resistance to fuel-efficient dual dry clutch automatics.
He also said that the car had too much content for its segment and needed to lose weight.
Marchionne succeeded with one five-year plan. Now he’s poised to unveil the next.
According to National Chrysler Dealer Council members, Chrysler Group dealers are now more profitable than they have been in decades. Chrysler Group dealerships coming up for sale are once again commanding premiums for "blue sky"-- the intangible value of a dealership, including goodwill and other intangibles such as customer lists.
Dealers have been able to offset a considerable drop in warranty work because of improving product quality with sales of parts, accessories and service plans. However, Chrysler's reliance on stair-step sales incentives -- which provide incentive payments to dealers only if they achieve certain sales goals -- leave some dealers less profitable than they could be.
Many of the 220 Fiat dealerships continue to struggle, though some are profitable. Some dealers spent $3 million or more to build stand-alone Fiat stores in 2010 so Chrysler could reintroduce the Fiat brand to North America. But Fiat dealers were given a skimpy product portfolio.
As for profits, Chrysler has been slightly more costly to operate than what Marchionne projected five years ago. Still, Chrysler did pay off its high-interest government loans by refinancing them at a lower rate in the private sector.
Parent Fiat also bought out the ownership stake of the UAW's Retiree Health Care Trust.
Chrysler earned its first post-bankruptcy profit in 2011 and has made more money each year. Last year's net income was $2.8 billion, compared with the $652 million it lost in 2010.
The plan's 2009 projections for global vehicle deliveries have been spot on, and Chrysler's plan to rebuild its U.S. market share to 13 percent is very close to completion. In July 2009, Chrysler's market share was 8.9 percent.
Chrysler made great strides in improving its relationship with suppliers between 2009 and 2012, but its progress was halted in 2013, according to a much-watched annual supplier survey.
Chrysler brought one assembly plant back that it intended to close after its April 30, 2009, Chapter 11 filing, and continues to add shifts and expand production at all of its 36 assembly, engine, transmission and parts plants.
Since 2009, the automaker has added 25,500 employees and invested more than $5.2 billion into its plants, including thousands of new engineers and designers.
Several of Chrysler's plants have dramatically improved their productivity and efficiency under Fiat's World Class Manufacturing system. Five of its plants -- Windsor, Toledo and Saltillo Truck assembly and Dundee and Trenton engine -- now rival Fiat's best operating global factories.
The gains made under world class manufacturing have allowed Chrysler to cut its manufacturing costs and increase profits.
On Nov. 4, 2009, the company set high targets. With few exceptions, it achieved them all. The company has dramatically improved its products, returned to profitability, paid off its government loans and bought out the stake owned by the UAW's health care trust.
Today, Chrysler is far different than it was five years ago. To Marchionne's credit, the company looks a lot like he said it would.
You can reach Larry P. Vellequette at firstname.lastname@example.org.