2011 Jeep Grand Cherokee
So far, so good, but "we're not in any position to pop champagne corks," says Chrysler Canada president Reid Bigland.
One key indicator of serious change at Chrysler is the reinvented 2011 Jeep Grand Cherokee. Riding on a Mercedes-Benz platform jointly developed with the old owners, Daimler AG, the new Grand Cherokee is earning strong reviews and selling well: overall sales of Chrysler's first all-new post-bankruptcy vehicle jumped 77 since it was launched in July.
Overall, "our retail sales (in Canada) are up 30 per cent (from last year) and total sales are up 27 per cent," says Bigland. "Year over year, our market share is up 2.1 per cent and Ford is up 1.9 per cent. Together with Ford, we've gained more market share than the other 18 (Canadian) manufacturers combined."
Chrysler, says Bigland, making his point about the importance of the company to Canada, is second only to General Motors in its manufacturing footprint, too: through the first nine months of the year, GM Canada assembled 387,848 vehicles, while Chrysler Canada was close behind at 387,805. Toyota at 341,639 was third and Ford of Canada fourth at 241,533.
The Grand Cherokee came first in the company's product renaissance because it's a powerful and obvious symbol of where Chrysler has been great and horrible in the past. Auto analyst Joe Phillippi of AutoTrends consulting, says the Grand Cherokee also should generate, on average, a profit margin of $8,000-$10,000 (U.S.). So it is critical for Chrysler's health.
It is a similar story for the all-new 2011 Dodge Durango SUV coming by the end of this year. It also rides on a shared Daimler platform, this one the GL, which of course shares much with the ML. Chrysler officials, however, argue that a comparably equipped Durango will sell for half the price of a GL - and the new platform being used by Dodge won't come to market in a Mercedes until next year.
Indeed, the current Chrysler management is now starting to move aggressively to tell the company's story, now that there are product stories to tout. Some think management is a strength at Chrysler and that has not always been the case. CEO Sergio Marchionne, also the Fiat CEO, has been a tireless and constant leadership presence, says Bigland.
"He's tough, but we needed that," he says.
In contrast to Chrysler, GM has had four CEOs in the last 20 months. Odd as it sounds, stability appears to be at hand for Chrysler. It's been a long time coming. After being taken over by Daimler-Benz AG in 1998, Chrysler was sold to Cerberus Capital Management in 2007 and then rescued from bankruptcy by a combination of government loans and the various equity stakes taken by Fiat and stakeholders such as the company's unions.
Now Chrysler is in a race to get new and better vehicles to market while carefully using limited funds. The big challenge is to turn skeptical shoppers into paying customers.
"They have done better than we expected," Rebecca Lindland, director of auto industry research for IHS Automotive in Lexington, Mass., told the Detroit News. "We have to give them credit for that and for just being alive."
A year ago, Marchionne outlined Chrysler's business plan through 2014 and last week in a conference call with media and analysts he reiterated the company's plan to do an initial public stock sale in the second half of 2011 and to repay more than $8.0-billion (U.S.) in U.S. and Canadian government loans by 2014. Chrysler remains committed to doubling its global sales and to being profitable in 2011.
Most important of all for Chrysler's health is to repay the loans that carry crushing interest rates of more than 10 per cent. Massive interest costs are the reason the company on a net basis lost $453 million on revenues of $31-billion during the first three quarters of the year. If Chrysler's bailout had been interest-free, if it had been essentially along the lines of GM's, the company would have made about $450-million in net profit this year.