UPDATED: 4/30/14 11:36 am ET -- correction
Editor's note: A previous version of this report incorrectly said that the new Chrysler 200 is smaller than its predecessor. It has been corrected.
DETROIT (Bloomberg) -- David Kelleher, a car dealer in suburban Philadelphia, said he’s in uncharted emotional territory: He’s excited about a new Chrysler sedan.
“This car won’t disappoint people -- there’s zero chance,” Kelleher said about the redesigned Chrysler 200, which will arrive on lots in May to succeed the existing 200 and the Sebring, which he said were good values but struggled to compete with the Honda Accord and Toyota Camry.
“I have never, ever sold a high-quality, desirable car in that segment,” he said. “But this is a really nice car.”
It would have to be. While Chrysler Group has logged 48 straight months of sales increases in the wake of its government-sponsored bankruptcy, much of the advances have been driven by the company’s trucks, SUVs and minivans.
The 200 is Chrysler’s attempt to claw its way higher in one of the most fiercely contested corners of the U.S. auto market, the $5.8 billion-a-year segment for mid-sized sedans. While Honda, Toyota and Nissan are less dominant than they were a decade ago, their Accords, Camrys and Altimas still account for 48 percent of U.S. sales volume in the segment, according to Autodata Corp. The existing Chrysler 200 is eighth out of 12 models in the segment.
IHS Automotive predicts that Chrysler is poised to sell 180,000 of the cars a year by 2016, up almost 50 percent from last year’s mark and enough to give the vehicle the seventh spot in the segment, if others’ sales were to remain steady.
Chrysler, owned by Fiat, expects to extend its overall run of sales growth to a 49th month in April, its U.S. sales chief, Reid Bigland, said earlier this month. When automakers release April sales figures Thursday, Chrysler will probably report a 16 percent increase, the average of eight analyst estimates in a survey by Bloomberg. Chrysler declined to disclose specific sales projections for the new sedan.
Industrywide sales for April may rise 9 percent to 1.4 million light vehicles, the average of 11 analyst projections. The annualized sales rate, adjusted for seasonal trends, may rise to 16.2 million from 15.3 million a year earlier. In March, the pace was 16.4 million.
Chrysler’s sales growth has been powered by the likes of the Jeep Grand Cherokee, the Ram 1500 pickup and the Dodge Durango, which the company redesigned in recent years to reviewers’ plaudits. It has also seen gains from vehicles with less critical acclaim, including the Jeep Cherokee, which received middling reviews from Consumer Reports. The Town & Country and Caravan minivans are also big sellers.
Chrysler hasn’t had a hit family four-door since the LeBaron in the 1980s. Its new 200 -- which is about a half-inch longer and 1.1 inch (2.8 centimeters) wider than the previous model -- marks the latest attempt by an automaker to dislodge the mid-size sedan stalwarts.
Ford’s sleek and well-received Fusion gained share last year at the expense of the Camry. Toyota plans to start selling a restyled version of the car later this year. Volkswagen AG had high hopes for its Passat model, which it made bigger and cheaper to appeal to mainstream American drivers. The Passat remains at No. 9 of the 12 in the segment, based on Autodata sales figures.
The new 200, with a sleek shape and headlights arranged into a scowl, starts at $22,695, including destination fees. It can go head to head with competitors, said several industry analysts.
Its not-too-radical design may be part of the strategy, said Kevin Tynan, auto analyst with Bloomberg Industries. Top-selling Accords, Camrys and Altimas offer safe designs aimed at the widest audience, he said. The edgier styling of the Fusion, Hyundai Sonata and Kia Optima have attracted new consumers but not enough to dislodge the Japanese trio.
“Either you butt heads with vanilla, or you come up with something a bit more polarizing,” Tynan said. “Chrysler with the 200 aimed for the vanilla.”
Another challenge for Chrysler will be to get car buyers to enter a dealership mostly associated with trucks.
“For the price and the value, there is nothing better on the market,” Al Gardner, CEO of the Chrysler brand, said in an interview. “The question is, can we get that customer to walk in the showroom and give us a chance to show how good it really is?”
Warmer weather in the second half of March brought buyers back to dealer lots for the best same-month sales in seven years, helping the industry bounce back after two months of unusually forbidding weather. Light-vehicle sales through March have risen 1 percent, after dropping the same amount through the first two months of the year, according to Autodata.
General Motors Co. may report a sales gain of 6 percent, while Ford’s deliveries may rise 3 percent and Toyota’s 13 percent, analysts said. Honda may report a 3 percent increase.
Chrysler, under Fiat CEO Sergio Marchionne, has come a long way from the doldrums of the past decade as it convinces consumers it is putting out better, more reliable vehicles.
The 200 started out as the Sebring. Pulitzer-prize winning auto reviewer Dan Neil, in 2007, called a convertible Sebring “a veritable chalice of wretchedness, a rattling, thumping, lolling tragedy of a car, a summary indictment of Chrysler’s recent management and its self-eradicating product planning, all cast in plastic worthy of a Chinese water pistol.”
‘Leaps and bounds’
Chrysler then patched up the Sebring and called it the 200, featuring it in a 2011 Super Bowl ad with rapper Eminem behind the wheel. That helped set the stage for Chrysler’s recovery with the tagline “Imported from Detroit.” Sales more than doubled in 2011 to 87,033 and peaked the next year at 125,476.
The latest 200 is “leaps and bounds” ahead of the outgoing model, Road & Track magazine said, yet cautioned that the car is “far from an outright favorite” in the segment.
Kelley Blue Book concurred, saying the 200 finally matches the competition.
“For a while now, when someone said the words Chrysler 200, people usually responded with various forms of cringing and grimacing,” Kelley Blue Book’s Trevor Dorchies wrote in a March review. “Let’s just get this out of the way right now: The 2015 Chrysler 200 sedan changes all of that.”
Chrysler dealer Kelleher said the existing 200 and its sibling, the Dodge Avenger, poached sales from his used-car lot. The new 200 should attract an entirely new customer, he said.
“That’s very, very important to the overall health of my dealership,” said Kelleher, who has sold Dodges since the early 1990s and has had his Chrysler dealership in Glen Mills, Pennsylvania, since 2005.
Kelleher is selling 125 vehicles a month now and expects to move as many as 190 a month soon. He’s spending $2.5 million to expand his store, adding 13 sales people and 11 desks.
“If you’re a Chrysler dealer and you’re complaining now, you’ve got to look in the mirror,” he said. “This is a great time.”