Chrysler’s product strategy: green
Last month, Chrysler lured James Press away from Toyota, putting Press in charge of new product for the “new Chrysler.” Press had been the boss of Toyota’s North American operations.
It didn’t take Press long to make clear the plan for Chrysler’s future products: he’s going to try to out-Toyota his former employer. Chrysler, he says, will offer every one of their models in an alternative fuel version. He has, in short, absorbed the idea that hybrids are the wave of the future.
Press is going to have to find that wave, however, before Chrysler can ride it. The first Chrysler hybrid is expected as a 2008 model and the company has done little to develop hybrid powertrains. Nonetheless, Chrysler has asserted that it will develop alternative fuel technologies in-house, rather than outsourcing to other suppliers, and set up the “ENVI” division two weeks ago to centralize that effort.
Press claims that Chrysler’s new owners, Cerberus, are prepared to make substantial investments in new product and technology development. But the implication that there is a big checkbook behind Chrysler is somewhat misleading. As part of the buy-out deal, Cerberus injected new capital into Chrysler. But there has been no indication that Cerberus could raise more money for the company, should it think it needed. That means Chrysler cannot afford to chase rainbows with the money they’ve got. They need it to produce results, and rather soon.
Press and Chrysler may have concluded that a hybrid powertrain was essential merely to stay in the game. But the insight into GM’s future product plans revealed in details of the new UAW contract suggest that GM is already so far into development of the second generation of its Two-Phase hybrid powertrain that they’ve committed to its production, even as the first generation is just now hitting the streets.
Despite all of the talk, Chrysler remains a seriously underfunded company in a business in which the capitol demands are astronomical. Moreover, it’s playing catch-up. Press’s remarks are just another in a series of statements from the “new Chrysler” designed to show that they’re going a new direction. For example, they’ve recently said that they’re going to be investing in China, to establish a significant presence in that market.
But these new directions are new only for Chrysler. For everyone else, they’re steps that were taken long ago. It’s like he ading to California for the gold rush, but waiting until 1951 to do it. What they say they are doing is really not revolutionary or imaginative. They’re just following the herd.
Moreover, the future for Chrysler is still clouded by two huge imponderables: the UAW contract yet to be negotiated and the possibility that the federal government will impose CAFE fuel economy standards that the company must spend billions to meet.
It is very doubtful that Chrysler really has enough money to both meet tight new fuel economy standards and develop new products, especially as they devote some of their limited resources to emerging markets in which other, stronger competitors have a big head start.
But, it’s their money.
Source: Detroit News