Chrysler's Long-Term Recovery Plan Finally Announced

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Researched by Industrial Info Resources (Sugar Land, Texas)--For decades, Chrysler Group LLC (Auburn Hills, Michigan) has been the smallest of the Detroit-Three, the almost forgotten little brother to both Ford Motor Company (NYSE:F) (Dearborn, Michigan) and General Motors Corporation (Detroit, Michigan). However, Chrysler suffered just as much, if not more, than GM when both companies collapsed and eventually entered bankruptcy proceedings earlier this year. Now that Chrysler has emerged from bankruptcy, owned and directed by Fiat SpA (OTC:FIATY) (Turin, Italy), a long-term recovery plan has finally been released dictating the steps the automaker will take to once again be a profitable and significant player in the U.S. automotive sector. Much of Chrysler's recovery will rely on Fiat's bringing its models back to the North American marketplace. Fiat was last in the U.S. in the 1970s and early 1980s, but left the market for a variety of reasons. Now that Fiat is the majority owner of Chrysler, the Italian automaker is using this opportunity to reintroduce its models and philosophies to the U.S. The general feeling is that Fiat's line of smaller, more fuel-efficient vehicles will be a big hit in North America, given the recent push for such vehicles.

Chrysler intends to return to profitability by 2011 and will have paid back the billions of dollars in government loans that allowed the automaker to survive bankruptcy by 2014. The short-term goal for the automaker is to increase revenue by approximately 20% per year, which will enable the company to break even in 2011. Chrysler is anticipating 2009 sales figures to be in the range of 1.3 million units. The goal is to double this number by 2014. This will require growth by all of Chrysler's brands: Chrysler, Dodge, Ram and Jeep.

To accomplish these lofty sales and revenue goals, major changes will have to take place within the lineup of vehicles that Chrysler currently produces. Beginning with the Jeep brand, these changes will be sweeping. Both the Patriot and Compass models will be modified in 2010, but will be discontinued by the end of 2012. The Liberty will receive a minor design upgrade and will also be discontinued by the end of 2012. In the place of these three vehicles, Chrysler will begin introducing Fiat models in 2013.

For the Chrysler brand, similar actions will take place. The PT Cruiser will be discontinued at the end of 2010, while the Sebring will see a major design upgrade in 2010 and then be replaced by a Fiat model in 2013. The 300 will remain as is and will remain in production. The Town & Country will receive a major design upgrade and continue to be produced. Fiat will introduce a new compact sedan in 2012, and a new small car and midsized crossover in 2013, along with the aforementioned replacement for the Sebring.

The Ram truck brand will also experience changes. The Dakota pickup will be discontinued in mid-2011, and a new midsized truck is under consideration for production once the Dakota's run is completed. The light duty pickup, heavy duty pickup and chassis cab versions of the Ram will all receive major design upgrades and continue to be produced, but Fiat will introduce large and small commercial vans to the brand in 2012.

Finally, the Dodge brand will also experience sweeping changes. The Caliber hatchback will be discontinued in mid-2012 and replaced by a Fiat model. The Avenger and Journey will receive major design upgrades in 2010, but the Avenger will be replaced by a Fiat model in 2013, while the Journey will survive. Both the Nitro and the Viper are being considered for major design upgrades, the Nitro in 2011 and the Viper in 2012. Their exact futures are still undetermined at this time. The Charger will survive as is, and the Grand Caravan will receive a major design upgrade in 2010 and will continue to be produced. Fiat will introduce a small car to the lineup in 2013.

These sweeping and dramatic changes are obviously necessary if Chrysler is to survive and carve out a unique niche in the automotive marketplace in North America. Chrysler must be aggressive and take back what has been lost in the last few decades. Chrysler's acquisition by Fiat gives the Italian automaker the avenue the company was searching for to reintroduce itself to the North American car-buying public. Whether Fiat and Chrysler can pull off such aggressive plans remains to be seen. The exact fate of Chrysler's assembly plants remains unknown, but this information will come as the recovery plans and new production are put in motion.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.