Episode 265 – Chrysler’s Turnaround Plan, Opel Workers Protest, NHTSA Criticizes Toyota

November 5th, 2009 at 12:29pm

Runtime 8:18

Chrysler CEO Sergio Marchionne held a marathon press briefing yesterday and made it very clear the company has the cash, the resources and the plan to turn itself around. Opel workers in Germany walked off the job to protest GM’s decision to keep it. NHTSA is criticizing Toyota for statements regarding its massive recall over floor mats. All that and more, plus a look at Sergio Marchionne’s plan to turnaround Chrysler.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Chrysler says it will break even next year. Opel workers walk off the job. And NHTSA says Toyota has a design defect with its floor mats. Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Thursday, November 5, 2009. And now, the news.

Chrysler CEO Sergio Marchionne held a marathon eight-hour press briefing yesterday and made it very clear the company has the cash, the resources and the plan to turn itself around. Chrysler says it will break even on an operating basis next year. It will break even on a net basis in 2011. By 2014 the company projects it will earn $8 billion in profit on an EBITDA basis—before taxes, depreciation and amortization. And Marchionne says Chrysler will repay all the TARP money it got from the US government by 2014. We’ll have more on Sergio Marchionne later in the show.

Just when you thought the GM/Opel saga was finally over, more drama flares up. The Detroit News reports that Opel workers in Germany have walked off the job to protest the General’s decision to keep Opel. Employees are worried about losing jobs as GM restructures the company. Its plan for Opel is similar to the one presented by Magna which called for the elimination of almost 11,000 European jobs, or 20 percent of the workforce.

Ok, you’ve got your front, side, side-curtain and knee air bags, but Ford will soon add another to the list – inflatable seatbelts. The Detroit Free Press reports that the company plans to offer “blow-up belts” as an option on the next-generation Explorer. The restraints are made out of a softer, more comfortable material than conventional belts. They inflate less forcefully than airbags and use “cool gas” making them safer for even children. Ford is not the only automaker looking into this technology. Mercedes had a concept vehicle with this a while back. You know, I first reported on inflatable seatbelts about 20 years ago. We’ll have more information on Ford’s inflatable “belt bags” tomorrow.

Porsche announced that the new Boxster Spyder will debut at the Los Angeles Auto Show next month. The soft top convertible is the third model in the Boxster line-up and comes equipped with a 3.4 liter six-cylinder engine with direct injection, that powers the car from 0-60 MPH in 4.6 seconds. It’s also the lightest model in Porsche’s line-up, thanks to the use of aluminum doors and other lightweight materials. The 2011 Boxster Spyder goes on sale next February in the U.S. with a starting price of $61,000.

The National Highway Traffic Safety Administration is criticizing Toyota for “misleading and inaccurate” statements regarding its massive recall over floor mats. According to the Detroit News, the automaker said that the agency found that sudden acceleration in vehicles was only caused by improperly fitting floor mats. However NHTSA says this misrepresents their findings which say that drivers should remove floor mats as an interim solution and that there is still a flaw due to the design of the accelerator above the foot well.

Coming up next you’ll get a chance to see Sergio Marchionne make his case about how Chrysler is going to survive and thrive.

As we mentioned at the top of the show, Sergio Marchionne held a marathon briefing yesterday for the media, analysts, suppliers and dealers. One of the messages he clearly wanted to get across is that he believes he can turn Chrysler around, just like he did with Fiat.

Marchionne also drove home the point that Chrysler is actually going to get a lot more new product in its showrooms a lot faster than anyone expected.

Marchionne made it quite clear that he believes he has the management team in place to pull off this turn around.

Marchionne believes that cars today have become too much of a commodity. He says Chrysler’s products will be far more expressive and he also takes a shot at the imports.

Before going into Chrysler’s media briefing yesterday I wasn’t sure if the company was really going to be able to survive. Now that I’ve seen their five-year plan I think they have a reasonable chance of making it.

Hey don’t forget to tune in tonight for Autoline After Hours. There has been so much big news in the industry this week, we’ll have a lot to cover. Join me, Peter De Lorenzo, and David Welch tonight live at 7 p.m. Eastern, or 2400 hours GMT.

And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.

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28 Comments to “Episode 265 – Chrysler’s Turnaround Plan, Opel Workers Protest, NHTSA Criticizes Toyota”

  1. Ron Paris Says:

    What in the heck is going on with this Toyota recall situation John?! There is so much conflicting info floating around (defective floor mat design, defective accelerator pedal design, defective ECU). No one seems to have a clue as to what the real problem is, or they’re just not saying.

  2. pedro Fernandez Says:

    Sergio, Sergio, why is it that I don’t believe a word you’re saying, you should be a plitician promising “changes” and how everything is gonna be just wonderful with Chrysler/Fiat. and how dumb Americans are for choosing well built, reliable cars for these past years instead of “passionate” cars with lots of “personality” like Fiats? give me a break please , if I want to laugh I’ll pop in a comedy in my dvd player.

  3. Dave Says:

    or Defective driver..

  4. Michael J. Brown Says:

    Amen Sergio. You said it! “Regardless of how good your quality is, if your cars are boring, they’re just BORING.”

    And despite being a Lexus fanboy myself, Toyota is about to get trumped in another 5 years or so if they don’t freshen up their fleet with some cutting edge, polarizing designs. They’ve already proven that people will buy a quality car even if it is bland. So why not try it from the opposite end of the spectrum and try building quality cars that stir the soul?

    Quality gaps are being closed on an almost monthly basis nowadays. So if Chrysler survives they could end up being a very desirable niche market car maker in another few years.

  5. Dave Says:

    I hope Sergio is right and we the US can get the $$$$ back. Man there is alot of glass 1/2 empty guys here

  6. Tony Gray Says:

    If Sergio can translate that passion into real action that results in the kinds of cars Americans will want to buy in decent quantities, then I think he will succeed. He doesn’t need to be number one, just viable.

  7. Tony Gray Says:

    Oh, and no Mercury girl for AAH again. I guess I will still have to wait for the Grand Marquis De Sade edition then.

  8. dcars Says:

    Sergio sounds great, “hey I grew up in Canada ‘A’” I hope it works out for Fiat and Chrysler.

  9. Dave D Says:

    Chrysler’s are going to cost more…Give me a break. The only reason anyone buys a Chrysler is when they are cheap. Chryslers are disposable. Buy them cheap and after the warranty is over scrap them when they break. It would take many years of quality improvements before anyone would pay premium prices for a Chrylser/Fiat. Lip service is cheap give us the product first then after a few years look at slightly higher prices. The competition is making the target even higher. I love my new Hyundai Genesis coupe and find it much better than any of my previous Chryslers.

  10. T. Bejma Says:

    Hate to fuel the C4C cost debate again, but this makes a lot of sense…


  11. Nick Stevens Says:

    there is alot of glass 1/2 empty guys here

    For a good engineer and cost-conscious manager, the glass is neother half full nor half empty.

    The glass is exactly twice as big as it should be !!!!

    Which reminds me..

    YOu cna say exactly the same thing about automotive capacity around the world… LOL!!!

  12. Nick Stevens Says:

    “Tony Gray Says:
    November 5th, 2009 at 12:50 pm
    Oh, and no Mercury girl for AAH again”

    What’s worse, no guests at all! This sucks.

  13. Alex Kajdi Says:

    Bravo Sergio Marchionne Bravo!

    Buona Fortuna con Chrysler!

  14. nick stevens Says:

    More like… “Porca Miseria” for them and us the long suffering Taxpayers…

  15. Salvador G. Says:

    Hey, JohnMcElroy, I wish I have a good AHH question to ask you after hearing Marchionne, but the only question I can think of is…

    AHH Question: Don’t you wish you could be under Marchionne’s skin and know what he knows??
    -cause that’s how I feel.
    -I wish you had the whole video of that conference McElroy.

    -AHH Question: John McElroy can you find out at what speed does the floor mats pushes itself forward in the car to cause an accident???
    … the only thing I can come up with is that people have one of their feet on the floor mat and as they brake they push it forward, I don’t know.

    DOES anyone here ever had experience with floor mats causing or almost causing an accident???

  16. Pedro Fernandez Says:

    Salvador: I have A Corolla and once the after- market heavy rubber mat got caught against the accelerator pedal, I just put the car in neutral and pulled it back away from the accelerator and it has not happened again, some people just panic I guess.

  17. Pedro Fernandez Says:

    I think the problem with the runaway Toyotas is that either the original mat gets loose from its anchor, or people put after-market mats which can slide forward during breaking or even just when drivers step on them and then get pushed against the pedal.

  18. Pedro Fernandez Says:

    Wow, Nick, pretty strong sentiments.

  19. Nick Stevens Says:

    Actually, Pedro, I stole the line “porca miseria” from “Click and Clack, the Tuppet brothers” on NPR, when they commented on the previous, and utterly disastrous, marriage between Fiat and GM, remember? GM lost $4 billion in the bargain, and $2 billion was just the penalties to get out of that mindless deal!

    It is amazing to me that a US automaker or the US government would trust Fiat after that debacle!!

  20. Nick Stevens Says:

    # T. Bejma Says:
    November 5th, 2009 at 1:26 pm

    Hate to fuel the C4C cost debate again, but this makes a lot of sense…


    This makes zero sense to me. Dealers and Makers of course have a blatant conflict of interest and nobody would expect their study to be objective, but instead applaud when we rob Peter (the long suffering taxpayers) to pay Paul (the dealers, makers and buyers) to do something they would do anyway.

    In past years, every september customers did get $4,500 average, but not from the taxpayer, but instead from the automakers themselves, trying to unload the inventory before the new model year.

    Even if it onl;y cost $4,500 a vehicle (PLUS the cost and damage done to destroy the frequently perfectly good trade in!!), it was an enormous waste.

    And, after all, where did this magic number $4,500 come from? Wouldn’t the program be successful if they gave much less per vehicle? after all many old clunkers are barely worth $1,000… sometimes less!

  21. Richard Sutherland Says:

    Marchionne certainly has passion. If he delivers on the promise Chrysler could be a very exciting brand. The Italians have always build cars of beauty and soul, which has been lacking in the industry for years. I think he is right about the commodity part. The fly in the ointment will reliability. With Japanese reliability and Italian soul, what not to like?

  22. Pedro Fernandez Says:

    Nick: but I believe there was no product interchange between GM and Fiat, correct? Just like there was little if any between GM and Subaru back when Gm owned part of them. and Richard where is the Japanese part of the Chrysler/Fiat marriage? I remember when Chrysler had a relation with Mitsubishi, except for a few Mitsu engines in Chrysler vehicles, I don’t think that marriage helped Chrysler reliability.

  23. C-tech Says:

    Pedro, as a technician THAT Mitsu marriage actually HURT Chrysler reliability. Not all Japanese cars have the quality of Honda and Toyota. In looking at the latest crop of Mopars, if Mr. Marchionne and crew can eliminate the pattern failures and upgrade the designs (go back and look at the concept cars, the Dodge Hornet should be the PT Cruiser replacement), then they certainly have a shot.

  24. Pedro Fernandez Says:

    C-tech: neither did its marriage to Daimler, so I find it funny that some folks expect this to change with Fiat, not exactly known for their quality.

  25. C-tech Says:

    I would beg to differ with D-B, Pedro. The Crossfire sucked because of the price and trying to adapt a great concept car onto old technology. The LH cars (300, Magnum, Charger, and Challenger) in general don’t fail to go, take abuse, and are reasonable priced for what you get. The marriage of the Hemi with D-B trans, rear end, brakes, traction control,and suspension is pretty good. The interiors lack pizazz (except the Challenger, IMHO) but the bodies are still sharp.

  26. Salvador G. Says:

    You know folks, expectations be good or bad can be wrong; when Chrysler and Daimler join expectations where high and now with FIAT their low – and I say give it a chance- remember years ago Hyundai and Kia weren’t known for their quality either.

    -And lets be honest… probably no one here has driven a NEW FIAT or NEW AlfaRomeo or Lancia, I say wait until they get here – then start bashing on them. CAPICE!!

  27. Dave Says:

    “…remember years ago Hyundai and Kia weren’t known for their quality either.”

    Not too many years ago Ford and GM were junk and some products are still junk.

    I Agree you Salvador few here have driven a
    NEW FIAT or NEW AlfaRomeo or Lancia. I think a Abarth Fiat 500 would be a great fun car. So, we will see how they do.

    for jobs and the well being of the US i hope well.

  28. Kit Gerhart Says:

    I drove a new Fiat rental car last summer, and it drove just fine. I also drove a Citroen rental car recently, also much hated by certain posters on this forum, and it also drove very well. Both had turbo diesels which got exceptional fuel economy, and were “torque monsters” considering their small displacement.

    A big thing that will determine the viability of any Fiat designs that make it to America will be fuel prices. The reliability needs to be decent, but doesn’t need to be up to Toyota standards for the cars to succeed. After all, BMW and Mercedes are doing ok selling EXPENSIVE cars which don’t do nearly as well in Consumer Reports reliability surveys as most Toyotas.