When we heard that "Bearish" Bob Nardelli got the top spot in Auburn Hills by boldly predicting that Chrysler was in deep shit, we reckoned that the former Home Depot CEO would be soon bordering on clinical depression. Well, more evidence has emerged that Nardelli "gets it" that Chrysler is swirling down the sales toilet, this time in the form of an email circulated to the Pentastar legions. The Detroit News reports that Nardelli's email "warned of worsening U.S. automotive sales and encouraged employees to stay focused." So what strategy did the bearish vicar (oh dear) offer to his troops to get them through the hard times? Little more than a Bush-esque "stay the course," as it turns out. Acknowledging Chrysler's overdependence on tanking pickup and SUV sales are a problem, Nardelli says that "further action" would be taken only (when) if sales continue to dip. Nardelli did justify his hefty salary by saying he predicted the current unpleasantness way back in November of last year. Then again, Chrysler doesn't pay Nardelli to be a fortune-teller; his job is to actually turn the company around. Or something.
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What exactly is he there to do and what made him the better choice over Wolfgang Bernhard for Cerberus?
Chrysler. I have had too many friends over the last twenty years buy their cars and minivans only to be in the shop many times for major repairs. When I buy a car (two Toyota products currently, – Vibe and Sienna) I don’t EVER want to be left on the side of the road. I don’t think the central problem with the the big 2.8 is mpg – it is quality. Chief quality violator among them : Chrysler.
Hyundai had those problems as well, but they cleaned up their act. so it is possible to do in just a few years.
Again, I would like to take this opportunity to welcome our new Chinese Automotive Overlords….. and to gently remind them I was on their side all along.
I’m actually now mildly optimistic for Chrysler and think that eventually they’ll offer cars that aren’t punchlines to dirty jokes.
I also think their marketshare will ultimately settle down near U.S. VW numbers.
Yes Bob, encourage all employees to stay focused. That’s been the problem all along! Who knew?
I’m sure now we’ll see Honda like quality across the board, right?
Are those crickets I hear?
TriShield,
A lot of this has to do with the Cult of Jack. Much of the ills of modern American corporate governance come from people who idolize Jack Welch’s tenure at GE.
Depending on who you talk to, GE suceeeded as a result of, or in spite of, Jack Welch. The problem is that a lot of the methods used at GE (which is a huge, horizontal conglomerate) don’t exactly map well to other industries (especially heavily vertical ones like, say, manufacturing a single, narrow product line). Welch and his ilk are very good at nip-and-tuck management, which is great when you’re a company with a lot of operational fat and a huge, diverse pool of income and expertise.
The problem is, there’s not a lot of low-hanging fruit in North American automakers for cost-cutters like Nardelli. You can’t really squeeze anywhere without adversely affecting quality or causing real strife. I think a lot of people hold Carlos Ghosn’s work at Nissan up as an example of what you can do with cost-cutting, but Nissan’s problems weren’t really cost as much as they were focus. Cutting them (and really, it was more a cost-reduction scheme that leveraged Renault) forced them to refocus on their core strengths.
What Chrysler need(ed) was a more of a product-focused CEO, someone with driving vision that could refocus the company on doing one or two things really well, rather than ten things badly. Jack Welch’s disciples are not those kind of people; neither are “We Are Immune to Mistakes” types like Daimler’s managers.
Trishield:
Rumor in DTW is that WB wouldn’t take the Nardelli deal of $1/salary w/ big options. Being the second fiddle apparently also didn’t play well.
If you buy the story that Cerberus panicked and went back to Press on bended knee, it lends a bit of credibility to the WB angle.
Actually, it’s not bad advice.
I was at a company that hit a downward trend. The employees weren’t actually that depressed, but middle management was terrified. They started circling the wagons, and had everyone running circles on activities to make sure that they didn’t lose their jobs. Results failed to matter anymore, it was all about doing whatever it took to keep your boss and his clique in a job. Those of us who were “bake a bigger pie” types eventually lost our jobs to those playing a Machiavellian strategy based on a zero sum game of “get me some pie no matter how much gets wasted.”
Chrysler will not be totally destroyed. There will still be jobs their for decades. Hell, there are still people working in jobs from Enron that never lost them. ENRON!
Once the mood changes from save the company to save yourself, things go down quickly. The best thing for folks at Chrysler would be if they all stopped reading anything in the press about the car business, period. They would be better off as a group.
Here is what he means by staying the course. Whether or not he is right or you agree with it, this is what he is what is hoping keeps Chrysler going over the next 2 years:
2009 – Dodge Journey off to strong start
2009 – Challenger creating a lot of positive press and hopefully solid sales
2009 – several current models will debut with line-item improvements to interiors.
2009 – New Dodge Ram – more fuel efficient and solid interior
2010 model year – New Phoenix V-6 engines which are more fuel efficient and will be used in a large portion of thier lineups.
2010 model year- New Dual clutch transmissions – debuting in Europe this fall – which are significantly more efficient
2010 – Project D revamp of mid-size cars
2010 – New small car made by Nissan
2010 – New 300C and Charger
2011??? – New Hybrid made in partnership with GE?
Alex,
There is no way the Challenger and redesigned Ram are going to buoy this sinking ship. That’s the reason they’re in this mess. Too much reliance on the hemi, the shittiest V-6 and 4-cylinder money can buy, cutting features and quality out of their products, and being a decade behind the technology curve. A hybrid in 2011? Is that a joke? Chrysler LLC isn’t going to survive 2009. But they have a plan for a hybrid in ’11? I call bullshit.
He’s collecting the big bucks because he’s better at spreadin’ it than anyone else. And I don’t mean joy.
@ Alex Rodriguez:
Uh-oh.
I think the reason they picked Nardelli over Bernhard was that Nardelli was more pessimistic, as in he was the one less likely to see any hope of success and thus bring Cerberus’ master strip and flip plan to fruition.
Damn, that Nardelli! May his soul rot in hell! Why couldn’t he just tell his people that the “turnaround plan is on track” like Waggoner and Muallay. How dare he utter something sounding like the truth. What kind of leader does he think he is!? This must be part of the master plan at Cerberus, to tell the truth about the condition of the market so that buyers for Chrysler (or pieces of it) will be lining up with fistfuls of money. Damn, those guys are slick! I bet they could sell ice cubes to Eskimo’s.
Alex Rodriguez wrote:
2009 – Dodge Journey off to strong start
2009 – Challenger creating a lot of positive press and hopefully solid sales
2009 – several current models will debut with line-item improvements to interiors.
2009 – New Dodge Ram – more fuel efficient and solid interior
2010 model year – New Phoenix V-6 engines which are more fuel efficient and will be used in a large portion of thier lineups.
2010 model year- New Dual clutch transmissions – debuting in Europe this fall – which are significantly more efficient
2010 – Project D revamp of mid-size cars
2010 – New small car made by Nissan
2010 – New 300C and Charger
2011??? – New Hybrid made in partnership with GE?
With all due respect, Alex, these things aren’t nearly enough.
The Journey – will struggle to reach the sales volume of the short wheelbase minivan it replaced.
The Challenger – will sell its 40,000 units per year, and this 40,000 will be more than offset by a >40,000 unit decline in sales of the 300 series and the Charger.
Line item improvements to interiors – I’m not sure what that means, but the Avenger & Sebring will still have the dynamic, performance and styling deficiencies that make them last in their class. By the way, they will be facing a new Mazda6, heavily revised Fusion/Milan, Touched up (6speed) Malibu, etc.
2009 Ram – it has a long way to go to be as good as the F150, Silverado or Tacoma. Then you have to battle the brand loyalty of current owners as well as the fact that the wholesale value of pickup trucks has declined 25% in the past 3 months.
2010 Phoenix engines – If they’re lucky, they’ll be as good as what Toyota and Nissan have now. Other automakers have moved on to small displacement, direct injected turbo 4 cylinders. Chrysler may be fighting the last war.
Dual-clutch transmissions? Even when the transmission is online, will Chrysler have the funds to engineer them into the cars mid-model cycle, or will they dribble into the market as each car is (belatedly) redesigned?
The bottom line is that Chrysler does not have the product in the pipeline necessary to stay in business as an independent automaker.
A-Rod: As far as I can tell, the turnaround plan is banking on the Nissan Versa and Project D. Which, for all we know, is seriously screwed. I just don’t see new V6’s and interiors doing enough to turn this disaster around. The VersaHornet and “D” are going to have to be amazing.
“Stay the course” isn’t looking like great strategy. Again.
Like I said you don’t have to agree with Bob’s “stay the course” reasoning. But fact is that Chrysler does not require the same sales volume as it did at the end of the DCX era. They are significantly smaller in terms of employees, models, are closing some factories and reducing it’s dealer network.
That combined with new engines, trannies, some new models, and improvements to existing models is what they are hoping keeps them going in the near term.
I think they missed the boat in a couple of respects as far as product:
1. Letting the PT Cruiser die on the vine. The orignal “Scion Xb” with some updates, their new 4-banger and a 6 speed would be selling well right now.
2. Wrangler Unlimited based small pickup. Offer it with the 4-banger and a 4 speed and they could sell a boatload of those.
I think you guys are misinterpreting Nardelli’s “stay the course”. I don’t think he means no product updates. I could be wrong though.
Just a few minutes ago, Allpar published some spyshots of the 2009 Sebring. Timely :-). Most noticeable change to the front end is the removal of the strakes on the hood. Allpar reports that it appears that other changes were made to improve looks and aerodynamics (for mileage). Add this to the supposed upgraded interior, and simplification in terms of number of options, and it appears Chrysler is trying to do what it says it can do as a private company.
A refresh 2 years in is virutally unheard of. In this case it is especially good since the car so desperately needed it.
http://www.allpar.com/cars/chrysler/sebring.html
I’d personally be surprised if they don’t come up with a number of lower-priced Jeep products.
The Patriot has been a success, even given its marginal execution. You’d think that Cerberus would add to the Wrangler lineup, if only to bolster the value of the brand to Nissan…er…the customer, of course.
“Then again, Chrysler doesn’t pay Nardelli to be a fortune-teller; his job is to actually turn the company around. Or something.”
He wants to turn Chrysler around, but he doesn’t have jack shit to work with.