A couple of weeks ago I posted my three ideas for General Motors to get back on its feet. This week I figured I had better get to Chrysler before there was no Chrysler.
As I stated before, it’s time to root for the American auto industry. This doesn’t mean buying the actual car. Anyone who puts down his/her own cash for a car should do it because the product is good, not because he/she feels a patriotic duty. When you cheer for an industry it just means to remind friends of a possible domestic alternative when they go car shopping, or to make sure you look at a domestic car on your own car buying trip.
With that stated, I give my three recommendations for getting the Chrysler showrooms to feel less like ghost towns:
Don’t Merge With GM
A merger with General Motors is death to Chrysler. Chrysler’s parent Cerberus Capital Management is not interested in being in the car business. But hopefully the tail will be able to wag the dog, and Chrysler management will convince Cerberus that Chrysler will be a much more profitable as a future sale. The first step is to find a partner outside the U.S. and reopen talks with Renault-Nissan.
Renault-Nissan’s CEO Carlos Ghosn is one of the most brilliant automotive strategists in the automotive industry. What Bob Lutz is to product design, Ghosn is to automotive strategy. He returned Nissan to profitability within his first full fiscal year at the helm. His approach targets internal strengths of the company and understands how to change public perception – two things very much needed at Chrysler.
Ghosn may be a savior on riding in on a white horse, but he still carries a dangerous sword. His history has shown that cuts will be made and jobs will be lost. But under Ghosn, in a few years when the financial crisis is over and the U.S. automakers will have revised car lines, Chrysler will still be around and possibly a strong contender.
A merger with General Motors is actually not a terrible idea from an economic standpoint. Industry annalists predict that the elimination of car lines and production that would result from the merger would eliminate the current excess supply in the market. But while this is good for the companies today, is the massive loss of jobs and industry voice really the only solution?
Give Wi-Fi Away
The uconnect system is an idea no one else is offering but the basic system will cost about $500, and additional parts to the system can run multiple thousands of dollars. Not to mention the $29 monthly service fee. This unique technology should be used as a marketing tool more than a profit/option tool.
Chrysler should take a page from General Motors’ OnStar, the cable company and drug dealers, and give customers a little free taste. If the basic uconnect technology is a no cost option and comes with six months of free service, then the technology may really take off. Quieting children by allowing them to plug into television or the internet will make the Chrysler the envy of soccer moms everywhere. This point alone may have the suburbs flocking to Chrysler dealerships.
Look to Europe Again, Welcome Fiat
This isn’t Chrysler’s first time in big financial trouble. It took the $1.5 Billion in loan guarantees it got from the U.S. Government in 1980, and it invested in a European idea that wasn’t in the U.S. The Caravan idea was already set in motion in Chrysler’s U.K. operations in the late 70s. Chrysler sold the U.K. operations before the loans of 1980, and the car under development became the Renault Espace, but the idea remained. So, Chrysler took the multi-purpose vehicle idea it created Europe and made the minivan – a true savior for Chrysler.
Why not take a page from the first saving moment, and go and plunge Europe again for a new savior? Right now we have most versions of popular European car designs, so it’s a matter of bringing in a desirable brand. There were rumors circulating about Fiat taking the excess production from Chrysler’s factories as well as using Chrysler’s distribution network to get its cars in the U.S. But now the current economic conditions will keep even the least sensible manufactures from making a heavy investment in the North America; so even Fiat has decided to run away.
In a time when there are few buyers in the market, it’s not only price, but also having a unique product that will sell cars. Chrysler should become the North American distributor for Fiat. Profit margins will be small with a wear dollar, but it should give more people a reason to check out a Chrysler dealership. This will give new energy to the brand, which means there will be more people on the lots, which also means the salespeople won’t look like ravenous dogs because they’ve seen their first customer all week.
I know there are definite flaws in my ideas. If you have a better solution, it’s time to suggest it because the American car companies need our support .