Marchionne vows never to repeat mistakes from Cherokee launch

DETROIT -- Chrysler Group CEO Sergio Marchionne acknowledged mistakes in the way the company developed and launched the 2014 Jeep Cherokee, and vowed to never repeat them.

"What we've learned is that we'll never repeat it. We're never going to take a plant down and be out of the market for over a year," Marchionne told analysts in a conference call today. "We were just naked in 2013" in the mid-sized SUV segment after dealers sold all the 2012 Jeep Libertys last year.

At sales of 75,483 units, the Jeep Liberty was the brand's third-best selling vehicle in the United States in 2012, behind the Grand Cherokee and Wrangler. The Liberty represented under 5 percent of the automaker's total U.S. sales in 2012 of 1,651,787 units.

The comments came as Chrysler reported a third-quarter profit of $464 million, and predicted what would be a stellar fourth-quarter performance to make its yearly guidance.

Delayed launch

The Jeep Cherokee went into production June 24 -- about a month later than originally planned -- at Chrysler's Toledo Assembly Complex, but didn't start being delivered to dealers until last week.

The unibody portion of the complex shut down in August 2012 to undergo a $500 million renovation to build the Cherokee.

As production began, engineers worked to fix the software that controls how the SUV's nine-speed transmission interacted with its innovative disconnecting drivetrain.

Both technologies were firsts on the market, and coupled with the Cherokee's two newly developed engines, presented a level of complexity that few other automakers would attempt.

When engineers found a software fix, Chrysler test-drove each Cherokee after it came off the line to make sure it was working properly, a costly and cumbersome process that added to its delayed delivery to dealers.

"We were naïve that it would be a seamless introduction," Marchionne said.

The Toledo complex is now building about 1,000 Cherokees per day, six days a week, on two shifts, the CEO said. Marchionne said Cherokee production would expand in 2014 when the plant hits full capacity. But he did not say specifically that Chrysler would add a third shift there.

The company plans to sell the Cherokee in 150 countries worldwide through the Fiat global dealer network.

Chrysler and corporate parent Fiat also plan to build Cherokees in China for that nation's market, but has not yet finalized its agreement with its Chinese manufacturing partner, Marchionne said.

Untested transmission

"What made this unnecessarily unique and painful is that we were introducing a never-installed transmission," Marchionne said. He added, however, that he believed that worries that the Cherokee was too complex were "probably exaggerated."

Marchionne expressed confidence going forward in the nine-speed automatic -- which Chrysler is licensing from ZF Friedrichshafen and building in its huge transmission complex in Kokomo, Ind.

"That transmission has all the elements that we feel are essential to our front-wheel-drive/all-wheel-drive portfolio," including the upcoming Chrysler 200 sedan, which will now launch in the second quarter of 2014, Marchionne said.