AUBURN HILLS, Michigan – Chrysler group Chief Operating Officer Tom LaSorda says the group will reach its ambitious targets for Europe because cars such as the Dodge Caliber, which debuts in Europe next year, have been made for European tastes. LaSorda shared his views with Automotive News Europe’s Executive Editor Peter Brown and Staff Reporter Mary Connelly.
Can the Caliber match the quality and the price of the incredible stuff made by the Europeans?
We have more incredible stuff than those companies. Yes, we can compete. That is why we are going to go in there.
Will you be a volume competitor?
To say we are going to be a 10 or 15 percent market-share player in Europe, I don’t see that. I see us being a niche player. But we have the capacity to give them quite a few units.
Will you give Europe the Dodge Stratus and Chrysler Sebring replacements?
That is a product we would look at down the road. Sebring is already sold in Europe. We’d be looking at that product, too.
Any decision?
We sell the Sebring today, so we would be looking at the product as well.
Will there be right-hand-drive versions?
We are looking at that, too.
With the volume you have, why introduce a third brand? Why do you need Dodge in Europe when you’ve already got Chrysler and Jeep, and you have limited volume to begin with?
First of all, the Dodge brand, once we researched it and tested it, has a pretty good image there.
Do they know what it is?
Sure. We are still going to advertise more to make sure they really know what it is. But don’t forget there are so many Europeans who know the US market. They vacation here. A lot of them work here. We have a good presence over there.
We’re not going to be bringing these big megacab pickup trucks to the marketplace. But we think on the car side and SUV side we can do OK.
What is the distribution channel going to be?
It will be through our current network. But that hasn’t been finalized.
You would have Chrysler-Dodge-Jeep dealerships there?
We have them in the US That is where we would like to go going forward.
Where are you going when it comes to hybrids?
We will be there with our first application near the end of 2007. Thereafter, starting in 2008, a lot more applications. We have been pretty quiet about which vehicles.
Will it be a full-fledged hybrid?
It will be the joint-venture hybrid. It will be new technology with us and GM. That is the application we are working on, front-wheel drive and rear-wheel drive.
How much are you investing in diesels?
This is a market we are putting a lot of money into. We are committing hundreds of millions of dollars in that application. And, of course, fuel cells down the road. We’ve got 100 on the road and putting in more applications. Everything from UPS trucks to other cars. Along with that, we still need gas-engine innovation and technology to improve fuel economy.
We are not putting all of our eggs in one basket because the cost of hybrids is still high. But we still need to play there because the ultimate is that people want fuel economy and performance both. We’ll be there will multiple applications.
Do you see diesels in cars and smaller vehicles?
All you have to do is look in Europe – 40 to 50 percent. In France, over 90 percent is diesel practically, depending on the lineup. The growth in Germany and Italy is very high.
We are doing the Liberty [sold as the Cherokee in Europe] diesel, which is very popular. By the end of the decade, you will see more car-based diesels as well.
How are the sales of the Jeep Liberty?
The days supply is extremely light.
You are making it in Toledo, Ohio?
Yes.
Where does the engine come from?
Italy. VM Motori. The days supply – we can’t keep them on the lots.
Will you expand production?
Who knows? Whatever the demand is. We will order more engines.
Is that in the pipeline?
We always look at demand. If we need more, we’re going to order more. I would assume, based on early indications, we’ll have to increase.
Does this make you say, what about Grand Cherokee?
It makes me think about everything. We’ve got to look at where the demand really is. We do Grand Cherokee diesels already in Germany. We wanted to look at the Liberty and see what the demand might be. Then assess the rest of the portfolio. We haven’t done that yet.
How has the Chrysler 300 changed the culture within the company and where you are willing to take more risks?
I don’t know that the 300 has changed the culture at all. What is has done is given people a lot of pride and excitement. One product can pull not only itself as being very successful, but it can pull in a whole suite of products.
From a culture perspective, people look at it and say, ‘Man this car has done it.’ But inside, we also know that is not the only winning vehicle. If you look at the Liberty. Even the Wrangler. They are doing pretty good.
Is the 300 look slipping over to other vehicles? Will that be a template or not?
If you look at what we have shown so far, everything, based on its brand, is unique. Some of the concepts, the Nitro and the Caliber, are pretty good examples of different avenues we take for design. We’re not going to make everything look like the 300.
Have you started making the 300 in Beijing?
We are still working on our final joint-venture signing. We are waiting for the ministry of commerce in China. As you know in China, the Chrysler group sales are not very high. Our whole focus is on increasing our sales in China proper. Unlike some of the other companies that are making in excess of a few hundred thousand units and growing, some having the capacity for half a million, we don’t.
We are still waiting for the joint-venture contract. We’ve got vans from the commercial vehicle division venture there we are waiting on. We’ve got the Mercedes project, and we’ve got the Chrysler project.
Our whole focus is on trying to increase sales in China proper because our sales are very low and quite frankly, at unacceptable levels. If you look at our joint venture at Beijing, some of the products are fairly old. We’ve got to look at that. That is some of the stuff we are studying. We did announce in Taiwan that we are going to make minivans there for the local market. The current minivan. That is the stuff we have been working on.
How international do you want to get?
In order for us to grow, we need to grow internationally. The growth in this market, let’s say it builds up 1 or 2 percent over time. But the growth markets are in Asia. We see [potential growth in] eastern Europe. India, which is tougher – there will be growth there, too. But that is really a small-car segment market and a pretty tough market to make money for a new player.
So some of these markets where you can’t compete, you’ve got to look at other alternatives. We see the growth to be in those regions. South America is another one. That is up and down. That’s a tough one to read.
But in order to do that we have grow in those areas like China. We’ve got to build more product and give them newer product.
Are you doing anything different in supplier relations?
Yes, we are. We have assigned another 80 to 100 people to work collaboratively with the supply base, upfront in supplier development. Where we have issues we are sending people to do quality assurance, doing joint audits with the suppliers and trying to improve their processes to give us better quality. I think that sent out a pretty good signal to a number of suppliers.
We had them in a couple of weeks ago, announced again, “This is a big change, and we want to work with you.”
Who did you have in?
A number of suppliers.
Large suppliers?
Yes. They were very appreciative that rather than browbeat them about quality, [we said] ‘Can we do things collectively? Are we doing things that are preventing them from giving us great quality, things like are we causing too many engineering changes or making late decisions that affect you? Just be upfront with us and tell us that and we will try to help.’
Everyone is under huge cost pressures: The suppliers and us.
What we try to do is say, ‘Let’s work together on innovative approaches to achieve the cost numbers. What can we do to help you?’ For example, I have met with a number of CEOs and top people in supply [companies] over the last year. A lot of them. I said, ‘What is it that we can do?’
When you talk about quality, can you distinguish between initial quality and long-term durability and reliability? And how you are progressing in the two different areas?
Short-term quality in all the measurements, J.D. Power and all that, is 90 days of ownership. Last autumn, we put in place a tag process. It is the Centers for Disease Control mentality – solving problems quickly because you lose one customer at a time if you don’t. We did a math-based algorhythm that we had our people write. I asked them, give me a math-based algorithm. What is normal warranty database? What does it tell you on labor codes?
Based on that, if you have a spike above normal variation, the computer program is written to flag it down. Then our central quality engineers investigate it, talk to the dealers, get the parts, analyze it.
It can only be three groups responsible right? It is either the supplier, the engineer or the plant. So we said, ‘Who owns it?’ Then we tap you on the shoulder and say, ‘Tag, you’re it.’
You’ve got seven business days to solve the problem short-term and have a long-term solution in place, or it hits my desk in seven business days. In 14 business days, it hits Dieter [Zetsche’s] desk. And nobody wants it to hit my or Dieter’s desk.
