The Chrysler PT Cruiser is hot. Before it sold a single unit, DaimlerChrysler last week added 50,000 units to its annual production schedule. The new units will be assembled at the Eurostar plant in Graz, Austria. Production there is scheduled for summer 2001.
Jim Holden, president of DaimlerChrysler in North America, talked with Staff Reporter Michael Woodyard about the new assembly plan and the challenges the PT Cruiser faces in Europe. Edited excerpts follow.
What prompted the decision to build the PT Cruiser in Austria?
We've got demand beyond our wildest dreams. We expected it to be true in North America; we've been surprised at the response in Europe, from dealers and customers alike. We did a research clinic in Europe. I personally thought maybe it's going to read too American, and it did not. We knew that we had first-year volumes of at least 25,000 for Europe. So we've been looking for a second source for quite a while. And we're also looking for a way to prove our commitment to Europe.
How will the European dealer body handle 25,000 additional units a year?
It will take us a little while to ramp up, but we've been doing a lot of work with the dealer body in the past year. Our problem on volume at the moment is not distribution capacity as much as it is product applicability.
Are you pursuing factory ownership in some European countries?
If, in Germany for example, we see a model where we can leverage our volume and profitability by owning a few stores, we wouldn't preclude it. But it's not a grand strategy on our part.
Will all of the PT Cruiser's components come from Europe?
We will probably still source a good portion of the product here (in North America) in terms of components. I don't know what we've announced and what we haven't announced, but if we were to do a diesel, that would be sourced from Europe. We'll build all the right-hand drives there. We will try to locally source everything we can.
Will you sell the PT Cruiser in Europe over the Internet?
We're basically sticking with the dealer model around the world. One of the problems of a company trying to establish its reputation in a new market is having an infrastructure to support those products once they're there. If I want to do a Hail Mary and do an Internet ship from here to some poor customer in Europe and then not be able to support the thing if it has a technical failure, or even a crash, and they need parts, I need dealers. I need a network of people who are in the towns where people buy the cars.