DETROIT (Bloomberg) -- Driving home from work earlier this month, Chrysler dealer David Kelleher was struck by a pang of guilt when he stopped at a red light behind a Dodge Caliber, a compact criticized for stodgy styling and inferior quality before it was killed off last year.
"It was from my store," said Kelleher, who has two Chrysler Group dealerships in Glen Mills, Penn. "I almost feel bad that a customer of mine is driving that car, considering the offerings we have now."
Chrysler has mounted a Lazarus-like comeback on the strength of its Jeeps and Ram pickups. Its car line, long a weakness, has played a smaller role, as CEO Sergio Marchionne face-lifted a few sedans with modest styling tweaks and terminated slow sellers such as the Caliber. That changes early next year with a redesign of the Chrysler 200 family car, a project that may be the company's most expensive.
"We really start to see the transformation of Chrysler's car lineup next year," said Jeff Schuster, an analyst with researcher LMC Automotive of Troy, Michigan. "That's the big test that's ahead of them. The industry is looking at the full redesign of the 200 as a way to measure Chrysler's success."
Chrysler, which emerged from a U.S.-government backed bankruptcy in 2009, has had 37 months of consecutive sales gains in the United States. Marchionne has forecast Chrysler will earn $2.2 billion this year and the U.S. automaker is now propping up its Italian savior, Fiat S.p.A., which is losing money as Europe's car market plunges to its lowest level in two decades.
Yet Chrysler cars still sell primarily on price, Kelleher said. The company has yet to field a signature model, such as General Motors' Cadillac ATS and Ford Motor Co.'s Fusion, that demonstrates Detroit is building its best sedans in a generation.
"I don't think anybody wakes up and says, 'Let's go out and get an Avenger,'" Kelleher said of the mid-sized Dodge sedan he manages to move with a $3,000 rebate. "The new 200 is going to be a different car. People will wake up and come to buy that car."
Kelleher is among Chrysler dealers who've been given a sneak peak at the next generation 200 and he's eager to get it on his showroom floor. Despite improvements Marchionne made to the current 200 model -- and the fame it gained from being driven by rapper Eminem in a 2011 Super Bowl ad -- it still doesn't match up well against Ford's stylish Fusion and Toyota Motor Corp.'s top-selling Camry sedan, Schuster said.
"I've been selling Chryslers since 1992 and, heck, I don't know if we've ever been competitive in that market," Kelleher said of the mid-sized sedan segment.
Ford's Fusion, up 25 percent in U.S. sales this year, sent Chrysler back to the drawing board on its 200 redesign, according to Kelleher. Chrysler told its dealers it threw away the design it had planned for the 200 once it saw Ford's new Fusion, with styling that evokes an Aston Martin luxury car.
"After seeing the Fusion come out, they said, 'OK, we've got to crumple this up and go back and do better'," Kelleher said Chrysler told the dealers. "They were somewhat challenged by the Fusion."
Chrysler didn't start over on the 200 after seeing the Fusion, said brand chief Saad Chehab, though he added that Ford's sedan had an impact, as did the Hyundai Sonata and Kia Optima.
"We react to things we see no matter where they are and the Fusion is one of the stops we made," Chehab said in an interview. "Our challenge was that if any of us walk into a room and look at the car, is my jaw going to drop?"
The 200's predecessor, the Sebring, was the target of withering criticism. Pulitzer-prizing winning car critic Dan Neil, then writing for the Los Angeles Times, called the 2008 Sebring convertible "a veritable chalice of wretchedness, a rattling, thumping, lolling tragedy of a car."
Marchionne ordered a fast face-lift and a name change for the Sebring shortly after he took control of Chrysler in 2009. That, though, was just a place-holder while Chrysler came up with a more substantial solution for the sedan, Schuster said.
Asked if the new 200 will be Chrysler's statement car, meant to set the standard for all that will follow, the automaker's design chief, Ralph Gilles said, "Well, we'll die trying because you're right, it's a very, very critical segment."