Last week, I fixed GM. Today, it's Chrysler's turn. This one's a little trickier, because they have a new partner (Fiat). So here goes:
1. Stop building FWD cars.
No, really. Now that you have a partnership with Fiat, leverage their extensive experience in this area, and trash your entire FWD fleet. None of them is really worth saving. Just look at how many Chryslers were purchased during the Cash for Clunkers program and you'll see what I mean.
Most importantly, get the Fiat 500 over here as soon as possible! It's a great competitor for Mini, and it can create a halo effect to get people back into dealerships.
2. Reduce "Badge Engineering".
Chrysler/Dodge/Jeep has WAY too many nameplates, given their market share. How many vehicles can you build off of the Caliber platform, anyway (I count at least 4!). Depending on how you count, there are between 20 and 25 nameplates across these three brands.
3. Clearly focus each brand.
Right now, each brand is trying to reach every consumer (hence the proliferation of nameplates). Refocus each one on its core customer.
Chrysler represents style and class. FWD is fine here, because Chrysler buyers aren't hot-rodders. Aspen is out of place - not clearly differentiated from the Durango it came from. Journey is more the Chrysler style.
Dodge is power. For cars, this means RWD. Challenger and Charger fit. Nitro doesn't. Dodge is also the logical home for trucks. Durango and Ram are right at home here. No sissy boys here!
Jeep is for the off-road crowd. No Jeep should ever be beaten off-road by any non-Jeep. Liberty? Maybe. Patriot? Probably not. Compass? Definitely not.
All three brands (especially Chrysler/Dodge) can be sold at the same dealership (and usually are), so people can cross-shop. Make sure that they don't see the same car over and over with different badges on the hood!
4. Leverage the Fiat relationship.
I mentioned this earlier with regard to FWD cars, but the reverse holds true as well. Alfa Romeo (a Fiat brand) has been selling fine FWD cars for quite some time. But they could (and it appears they will) leverage the 300 platform for the next-gen Alfa 159, which will allow for economies of scale in production and development.
On top of that, you now have a dealer network you can leverage to sell Fiats and (more importantly) Alfas in the States again, and a dealer network in Europe that can sell American muscle and off-roaders.
And finally, you now have plants on just about every continent, so if you get your production systems aligned (not a trivial task), you can build cars wherever it makes the most sense based on manufacturing and transportation costs.
5. Most importantly: FIX THE QUALITY.
Land Rover has perennially been at the bottom of the quality ratings, but this year, they were bumped out of that slot by Jeep. Build quality is abysmal, and hasn't really shown much improvement.
On top of that, the appearance of quality is missing! Too many hard plastics, loose switches and enormous panel gaps. As I said in the previous post, VW, despite middling quality, is able to sell on quality because the cars SEEM well put-together. Without that, you'll never get anyone back.
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Of the Big Three, Chrysler is the company with the most challenges ahead of it. But the partnership with Fiat presents some unique and promising opportunities. Let's just hope they don't let those slip through their fingers, because it would mean the end of several storied automotive marques.
Friday, August 28, 2009
Saturday, August 22, 2009
If I were the Car Czar (Part 1)...
There has been much talk about how the government bailout of GM and Chrysler would affect their business. The appointment of a "Car Czar" caused special consternation.
In the end, though, not much has changed. GM and Chrysler are still operating fairly independently, with little interference from the government.
Still, I thought it would be interesting to ponder what I would do if I were in charge. I'm tackling it in pieces, because it's just too much to think of all at once, so here's my advice to GM:
1. Dump GMC.
Kudos to GM for dumping Pontiac, Saturn, Saab, Opel and Hummer, but I don't see any reason for GMC to continue to exist as a separate brand. GMC products fall into 2 categories: Chevy clones, and heavy-duty trucks.
GM has positioned GMC trucks as "luxury" versions of the Chevys, but that's why they have the Escalade. As Colin Chapman once said, "Simplicate, then add lightness". In this case, lightness means reducing the weight of additional brands and their overhead.
As for the heavy-duty trucks, buyers of these are driven by cost (both purchase cost and maintenance cost). They couldn't care less whether the grille has a "GMC" or a Chevy bowtie on it.
2. Move some existing Pontiacs over to Chevy.
With the death of Pontiac, GM loses some beautiful cars. Most notable are the G6 (especially the coupe and the convertible) and the Solstice. Turn these (at least the G6) into Chevys, and retire the Chevy versions.
Sure, you may need to redo some details for brand consistency (the grille, for example), but you'll have cars with character, which many of the Chevrolets are sadly lacking. And the Solstice would provide Chevy with a less-expensive alternative to the Vette, giving people a path to step up to the real thing.
3. Clean up the Chevy lineup and improve differentiation.
Can anyone tell me the difference between the Impala and the Malibu? Anyone? Bueller??
Chevrolet doesn't have a clear "product walk" in their lineup. At Ford, it goes Focus->Fusion->Taurus. At Toyota, it's Yaris->Corolla->Camry->Avalon. But at Chevy, once you pass the small stuff, it gets messy. It's hard to tell whom they're aiming each product at.
4. Focus on quality finish, inside and out.
GM quality is light years beyond where it was even a few years ago, but most people don't realize it. Why? Because the parts that you see still sometimes have a low-quality "feel". They have gotten much better in this regard, and some cars (notably the Malibu) are quite good, but in many cases, there's still too much hard plastic, floppy switches and wide panel gaps.
Volkswagen has understood this for years. While their quality has never been terribly high, people have always perceived VWs as high-quality because their interiors are beautifully finished.
Quality is reflected in design, too. The Mini is an extreme example of this. Again, BMW's build quality is only average, but the design is so appealing, people see it as higher-quality than it actually is. Get this right, and people will beat down your door. Get it wrong, and they won't even get to the showroom.
5. Don't obsess over market share.
I was very concerned when I heard Ed Whitacre, GM's new chairman, say that they would focus on not losing more market share. Focus on profitability, not market share! The easiest way to increase market share is to give away the cars, but I'm pretty sure that's not really a good business model.
Bankruptcy gave you the opportunity to reduce your infrastructure by closing plants and dealerships, which you did. Now it's time to recognize that with fewer plants, fewer dealers and fewer nameplates, it's reasonable (and can be profitable) to have lower market share. Once you've stopped the bleeding, THEN you can think about gaining back lost market share.
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Of course, there's much more that GM can do, both on the product side and on the business side, to get their house in order. But I'd say that these few things would get them well on the way to regaining their lost mojo.
In the end, though, not much has changed. GM and Chrysler are still operating fairly independently, with little interference from the government.
Still, I thought it would be interesting to ponder what I would do if I were in charge. I'm tackling it in pieces, because it's just too much to think of all at once, so here's my advice to GM:
1. Dump GMC.
Kudos to GM for dumping Pontiac, Saturn, Saab, Opel and Hummer, but I don't see any reason for GMC to continue to exist as a separate brand. GMC products fall into 2 categories: Chevy clones, and heavy-duty trucks.
GM has positioned GMC trucks as "luxury" versions of the Chevys, but that's why they have the Escalade. As Colin Chapman once said, "Simplicate, then add lightness". In this case, lightness means reducing the weight of additional brands and their overhead.
As for the heavy-duty trucks, buyers of these are driven by cost (both purchase cost and maintenance cost). They couldn't care less whether the grille has a "GMC" or a Chevy bowtie on it.
2. Move some existing Pontiacs over to Chevy.
With the death of Pontiac, GM loses some beautiful cars. Most notable are the G6 (especially the coupe and the convertible) and the Solstice. Turn these (at least the G6) into Chevys, and retire the Chevy versions.
Sure, you may need to redo some details for brand consistency (the grille, for example), but you'll have cars with character, which many of the Chevrolets are sadly lacking. And the Solstice would provide Chevy with a less-expensive alternative to the Vette, giving people a path to step up to the real thing.
3. Clean up the Chevy lineup and improve differentiation.
Can anyone tell me the difference between the Impala and the Malibu? Anyone? Bueller??
Chevrolet doesn't have a clear "product walk" in their lineup. At Ford, it goes Focus->Fusion->Taurus. At Toyota, it's Yaris->Corolla->Camry->Avalon. But at Chevy, once you pass the small stuff, it gets messy. It's hard to tell whom they're aiming each product at.
4. Focus on quality finish, inside and out.
GM quality is light years beyond where it was even a few years ago, but most people don't realize it. Why? Because the parts that you see still sometimes have a low-quality "feel". They have gotten much better in this regard, and some cars (notably the Malibu) are quite good, but in many cases, there's still too much hard plastic, floppy switches and wide panel gaps.
Volkswagen has understood this for years. While their quality has never been terribly high, people have always perceived VWs as high-quality because their interiors are beautifully finished.
Quality is reflected in design, too. The Mini is an extreme example of this. Again, BMW's build quality is only average, but the design is so appealing, people see it as higher-quality than it actually is. Get this right, and people will beat down your door. Get it wrong, and they won't even get to the showroom.
5. Don't obsess over market share.
I was very concerned when I heard Ed Whitacre, GM's new chairman, say that they would focus on not losing more market share. Focus on profitability, not market share! The easiest way to increase market share is to give away the cars, but I'm pretty sure that's not really a good business model.
Bankruptcy gave you the opportunity to reduce your infrastructure by closing plants and dealerships, which you did. Now it's time to recognize that with fewer plants, fewer dealers and fewer nameplates, it's reasonable (and can be profitable) to have lower market share. Once you've stopped the bleeding, THEN you can think about gaining back lost market share.
-----
Of course, there's much more that GM can do, both on the product side and on the business side, to get their house in order. But I'd say that these few things would get them well on the way to regaining their lost mojo.
Welcome to Thought-o-Motive!
If you're reading this, you're probably wondering who I am to be writing about cars and the automotive industry. Ah, who am I kidding? If you're reading this, it's probably because you know me and I sent you the link!
Still, just in case there's anyone out there bored enough to land here randomly, I thought I'd let you know where I'm coming from.
I have some experience in the industry, working for one of the Big (or not-so-big) 3, and my time there helped color my thoughts on the industry. But most of my viewpoints are not those of an industry insider. They are instead those of someone who has loved cars since he was a boy.
I came of age in the bad old days of the Big 3, the '70s and '80s. Back then, GM, Chrysler and Ford didn't really have anything worthwhile to offer. GM had Fieros, whose name reflected an unfortunate tendency to burst into flames, Chrysler had "fine Corinthian leather", and Ford had 4-cylinder Mustangs (!). Yet even then, there were flashes of brilliance.
Of course, there were Porsches and Ferraris, but who could afford those? I learned to drive in a Subaru GL wagon with a 5-speed, and for a 16-year-old, it was actually pretty entertaining. Fiat, MG and Alfa hadn't left these shores yet, and if you looked hard enough, you could still find well-cared-for, low-mileage '60s Mustangs and Camaros.
The year I graduated from college, Mazda introduced the Miata. I bought one of the first ones to arrive in the US, and I was in love right away. I took it to the track, and I took it for long drives on twisty roads. Sure, it only had 116hp, but it was the MGB I remembered from my youth, without the oil leaks and random electrical failures.
Still, I always wished that the US manufacturers could get their acts together. They had been great once, right? Then they lost their way, wandering amongst the Explorers and Grand Cherokees, while their cars remained stuck in the past. But recently, there have been signs of life. Cars from the Big 3 (well, Ford and GM, at least) are higher-quality than ever before, and often beat the imports. And just as important, they're building cars with CHARACTER again. Despite the economic climate, there's never been a better time to be a gearhead.
So my goal with this blog is to throw out my opinions on the industry and the cars and trucks they're building. I don't claim to be an expert, and I'm not poring over sales numbers and profit margins. If you disagree with my comments, let me know about it. But mostly, I hope you find this an interesting source of good "car talk"!
David
Still, just in case there's anyone out there bored enough to land here randomly, I thought I'd let you know where I'm coming from.
I have some experience in the industry, working for one of the Big (or not-so-big) 3, and my time there helped color my thoughts on the industry. But most of my viewpoints are not those of an industry insider. They are instead those of someone who has loved cars since he was a boy.
I came of age in the bad old days of the Big 3, the '70s and '80s. Back then, GM, Chrysler and Ford didn't really have anything worthwhile to offer. GM had Fieros, whose name reflected an unfortunate tendency to burst into flames, Chrysler had "fine Corinthian leather", and Ford had 4-cylinder Mustangs (!). Yet even then, there were flashes of brilliance.
Of course, there were Porsches and Ferraris, but who could afford those? I learned to drive in a Subaru GL wagon with a 5-speed, and for a 16-year-old, it was actually pretty entertaining. Fiat, MG and Alfa hadn't left these shores yet, and if you looked hard enough, you could still find well-cared-for, low-mileage '60s Mustangs and Camaros.
The year I graduated from college, Mazda introduced the Miata. I bought one of the first ones to arrive in the US, and I was in love right away. I took it to the track, and I took it for long drives on twisty roads. Sure, it only had 116hp, but it was the MGB I remembered from my youth, without the oil leaks and random electrical failures.
Still, I always wished that the US manufacturers could get their acts together. They had been great once, right? Then they lost their way, wandering amongst the Explorers and Grand Cherokees, while their cars remained stuck in the past. But recently, there have been signs of life. Cars from the Big 3 (well, Ford and GM, at least) are higher-quality than ever before, and often beat the imports. And just as important, they're building cars with CHARACTER again. Despite the economic climate, there's never been a better time to be a gearhead.
So my goal with this blog is to throw out my opinions on the industry and the cars and trucks they're building. I don't claim to be an expert, and I'm not poring over sales numbers and profit margins. If you disagree with my comments, let me know about it. But mostly, I hope you find this an interesting source of good "car talk"!
David
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