AFSCME 3357-HOF'S BLOG

For Chrysler, 1998 Was a Very Good Year
2008 -- Not so much

Allpar.com has a good article about the Chrysler Corporation of 10 years ago. The year 1998 was a very good year for Chrysler. The company made profits of $2.74 billion that year. It had a line-up of new or newish trucks and cars.

Fast forward to 2008 - not so great gravy. Daimler abandoned Chrysler with a line-up of aging (Chrysler 300) or hopeless (Sebring/Avenger) cars, no small cars whatsoever, a mish-mash of out-of-fashion SUVs, thirsty trucks, poor supplier relations and staggering retiree liability. Chrysler has a new halo car, the Challenger that is just hitting the dealership now, but it's a 25,000 unit/year model that can't save the company from its current 20+% year-to-year sales slide. After the Challenger, the only significant new product that's slated to hit the streets in the next year and a half is a redesigned Ram pickup. The new Ram will be going toe-to-toe with a brand new Ford F150. The F150 is only the best selling motor vehicle model in the United States. At best the new Ram will maintain current market share in a shrinking market.

Chrysler has emergency plans to get new product into the showroom in about two years. They have arranged to get a small car from Nissan, import a really small car from China made by Chery, and they have a balls-out program to improve the Sebring and Avenger. There's some chance that Chrysler's distribution network is attractive enough for a foreign company to buy Chrysler lock-stock & barrel in order to get a ready-made network of dealerships. Possible buyers include Renault, Fiat and several Chinese manufacturers. Just this week, Chrysler ruffled some feathers by introducing a plan to reduce supplier costs by 25% within 3 years. It doesn't take a genius to see that the most likely way that 25 percent reductions would take place is by off-shoring to low-wage countries.

All in all, about the only thing that you can count on for Chrysler is that the Chrysler of 2018 (if there is such a thing) will look very different from the Chrysler of 2008. What is currently perhaps the most American of the old Big 3 manufacturers is likely to be exactly the opposite a decade from now.