RAW NOTES: Chrysler’s 8-Hour Press Conference

November 9th, 2009 at 3:04pm

Chrysler's executive team gathered for a massive media briefing on the future of the company.

Chrysler's executive team gathered for a massive media briefing on the company's future.

Chrysler recently held an 8-hour press conference to brief the media, analysts, suppliers and dealers on its 5-year plan. The following report comes from the raw notes I took during this conference, which contains more information and specifics than the three-ring binder that Chrysler handed out. Specific highlights of note: plans for the Viper, selling semi trucks under the Ram brand, and full Product Plans through 2014.

Read on for the full download …



NOVEMBER 4, 2009


Robert Kidder, Chrysler Chairman

Problems can be solved. Management has strong leadership record. Will re emerge as strong competitor.

#1 goal: invest in brand and product offering. Then: Leverage alliance with Fiat, Chrysler will manage supply chain. Will get higher levels of consumer satisfaction. Will continue to cut costs, will grow Mopar.

Will make this a public company again, and pay off all loans and the govt.

Sergio Marchionne

“Let me clear up misperceptions, we’re not losing money.”

They have $5.7b in cash (Sept.), up from $4b (June)

EBITDA positive $200 m

Operating profit in September.

Massive reduction in fixed cost, not spending much now.

Ralph Gilles, Dodge

Sergio breathed life into Chrysler

Honored and humbled to be here.

Well on way to transforming products, will soon be amongst best in world.

Dodge: today it’s the ram’s head that represents the brand. But it’s truck focused.

Will create new image for Dodge car, amplify the youthfulness. New logo: the letters Dodge. It will represent lifestyles, not age groups, or classes. America has fundamentally changed, so has concept of what’s old.

Will repackage current cars this year. New options. Overhaul branding, marketing, positioning. No more base car, then mid, then high. Now they will price cars according to lifestyle of buyer which they identify as: sweet simple, fun practical, uptown luxury, thrill seeker, ultimate performance (SRT), cool extrovert.

e.g., Dodge Nitro: will make it less off-road looking, and more urban custom.

Core of brand will be: Caliber, Avenger, Journey, Caravan.

Fix fundamentals. Fixing perceived quality as well as real quality. Retune the driving experience.

Caliber: new interior, wheels, colors, retuned. Will add trim to make it look better. January 2010 it debuts.

Avenger: new interior, engine, NVH, and better mpg.

Journey: new interior, engine, refreshed exterior.

Caravan: new int and ext, engine, retuned.

Charger: all new, dramatically restyled, new engine, better mpg

7-pass CUV: all new design.

C-segment: for 2012-2013. Based on Fiat platform. Most efficient Dodge ever.

B-segment hatch, all new

D-sedan, all new to replace Avenger.

Will stay in racing. One team: Penske. Nationwide w/2 cars, Challenger. Missing out on Grassroots and Pro Sport, want to fix that.

Viper: will build 500 more, most special models ever, stop production in June, come back in 2012.

Doug Betts, Quality

Know they have a problem with perception, and know they have to change.

Chrysler really wasn’t organized for quality. Strategy was not clear, could not keep up with competition, launched new products with below average quality.

Now will define quality with metrics, targets, responsibility.

Are changing monthly review from boardroom style meeting, to go-and-see meetings.

Original Quality organization was 200 people. But each org. in the company had its own Quality group with their own plan, it was cumbersome to manage across the co. Now they have 1500 cross-functional people working on a coordinated Quality plan. Started this in January 2008.

How they improved current products: changed metrics which were based on measuring only on annual basis. Used to take 71 days just to get someone to agree to take on a problem-solving project to determine the root cause of the quality problem. Now assign problems to functional area: e.g. any brake problems go to the brake group. Delays in starting a problem-solving project went from 71 days to zero.

Perceived quality: changed Chrysler’s audits to match Fiat’s for appearance related issues. Added 200 engineers to Quality Control mainly in manufacturing. Replaced J.D. Power CSI customer survey with their own Customer Promoter Survey. It asks customers one simple question: Would you recommend your car to friends, and it not, why? They ask this question from the day after buying, to 5 years of ownership. ID’d 3 areas to recover satisfaction. One key area: service parts technical improvements. Service parts needed redesign, needed new tools to repair it. One example of doing this: a $475 service charge dropped to $4.75.

Testing used to reside in engineering. Now all testing done by Quality. There is a new testing protocol for real world models. Doing more virtual testing too.

New model launch: 320 functional requirements, benchmark best competitors, set targets based on customer needs, get impartial 3rd party review, still learning from Fiat on how to do this last point.

Have a digital process to improve perceived quality: e.g. they use this to help conceal  hardware that you can see looking in the wheelwell, like part of the suspension or the brake components

They will match best mass market competitors by 2012.

Scott Kunselman, Chrysler Engineering

Organized into 7 strategic priorities

  1. align with Fiat
  2. align resources to support 5-year plan
  3. maximize use of common platforms, systems and components,.
  4. maximize MPGs, reduce weight, optimize aero
  5. deliver technologies for mpg, infotainment, connectivity
  6. enhance speed to market using Fiat benchmarks
  7. do more advanced powertrains

Will add 21 new models jusing 4 fewer platforms

Avg. model per platform goes from 1.9 to 3. Volume goes from 125,000 to 305,000 per platform, a +144% increase.

Powertrain = 25-30% cost

Modules = 30-35%

Components= 10-15%

Brand differentiation = 35-20%

Aero achievement is a mandate. Ram CdA is best 15.2 vs. 15.3 Silverado, 16.0 for F-150.

Use computer analysis to reduce mass. Next D-segment SUV = -600 lbs.

Will share electric and electronic architectures across all models, both Chrysler and Fiat. Infotainment and connectivity can come faster this way. Text-to-speech will be added for text messages to reduce distraction. Fiat’s EcoDrive and EcoRoute and Eco(?) coming to Chrysler.

UConnect will provide seamless integration of mobile devices.

Virtual design and development will result in16 month car. 25% less time than now. Chrysler’s virtual design will be expanded, will commonize with Fiat. Will eliminate full-skin prototypes when using existing structures.

Will increase engineering resources through purchasing services, using design firms, and some new hires.

Paolo Ferrero, Chrysler Powertrain

Key issues:

Attain powertrain leadership in North America taking advantage of Fiat expertise.

Extend the life time of the best (and future) Chrysler powertrain portfolio.

Establish a cross-functional structure involving finance, manufacturing, procurement and r&d.

Cut time to reach best in class and time to market

Strengthen core competencies.


Fiat = expertise in diesels and small engines, smaller than 1.8 l.

Chrysler = expertise in large engines, hybrids and EVs.

Fuel Economy:

Continue evolutionary improvements of ICE.

Rapid introduction of downsizing, turbo, Multiair, stop/stop, DI.

Only build limited volumes of EVs and hybrids, until they become more affordable.

Getting ready for CNG, bi-fuel, tetrafuel (can run on CNG, ethanol, gasohol, or gasoline), and start/stop.

1.4 liter Multiair will in Fiat 500, beginning Q4 2010. It will be sold as a Fiat.

1.4 turbo Multiair Q4 2011 (Abarth?)

Pentastar V6 comes Q2 2010, will add Multiair, single turbo and twin turbo.

350 Nm/260 lb-ft, 280 hp

Apply Multiair, DI, to all gasoline engines.

Drop 4-speed, enhance 6-speed

Add Fiat C635 DCT over time, it’s a 6-speed that boosts mpg 10%.

Purchase RWD transmissions to get best tech.

New fuel efficient axles at ZF Marysville plant.

They will use diesel Multijet II, a Fiat developed injector.

Jeep Wrangler gets a diesel  with start/stop Q4 2010, other Chrysler vehicles will get diesels.

Ram 1500 hybrid continues

Plug-in fleet of minivans and Ram in 2011.

BEV van in late 2011 or early 2012.

Go from 10 engine families to 4.

4-cyl goes from 19% of mix to 38%

6-cyl goes from 54% to 38%

Legacy engines go from 84% to only 12% of mix.

9% of engines will be purchased (Cummins?)

Fred Diaz,  Ram Trucks

Ram trucks will have market coverage from class 2 to class 5.

Freshest line-up in market.

“My name is Ram” Tag line to introduce public to the brand.

It will still be a Dodge, but the old mega-brand, one-size-fits-all doesn’t work anymore, will distinctly distinguish the Ram brand.

All Dodge dealers will sell Ram trucks, will focus more on commercial products and services than they did before.

Could get into heavy truck including 18 wheelers.

2014 = will sell 415,000 units, up from 280,000 today.


Michael Manley, Jeep

Brand loyalty for Jeep has fallen. Was #1 SUV brand in world, now #3.

Need to communicate with customers much more, do it consistently.

Will build and grow to 800,000 units by 2014.

Will connect with doers (who need a Jeep) and dreamers (who want the authentic equipment).

Will create new Jeep brand image, connect via lifestyle, deliver a clear call for action (get out and do stuff! …in a Jeep).

Will cover B through E segments. Each line will have “Trail Rated” model for best off road capability in its segment. Wrangler will be same as always: body-on-frame, with solid front and rear axles.

New = Grand Cherokee Q2 2010.

Compass, Patriot dropped. Liberty kept.

Showrooms will be redesigned for brand.

Will get more involved in social media.

Interact with customers at grass roots level, Jeep Club will be created.

Scott Garberding, Manufacturing

Fiat developed its own manufacturing system, much like Toyota.

The old Chrysler focused on safety, quality, and Harbour Report, but it did not change the fiber of how it ran its operations.

Chrysler is still focused on safety, but now applying World Class Manufacturing system to it. Achieved 35% reduction in injuries 2005-2008, but then leveled out. Now, with new system, they’re reducing injuries again. Same with hours per vehicle, now expect to drive this down to lower levels.

He shows a video of workers cleaning up the Jefferson North assembly plant.

[My reaction: To me, this is depressing. How did they let it get so bad? I’m hearing the same turn-around stories I’ve heard several times before in previous decades. Everyone is excited and engaged and proud again. How did they lose it? What was LaSorda and Ewasyshyn doing?]

Dan Knott, Purchasing

Part cost reduction through dedicated teams.

Supplier relationships improved through increased communication and streamline internal processes.

Fiat $40B and Chrysler purchasing $28b = $68 billion

Currently share 52% suppliers, 2014 will be 65%.

New Chrysler organizational structure mirrors Fiat so they can source commonly (metallic, mechanical, chemical, electrical, etc.) develop shared strategies, compare prices they buy right now, figure out where they’re going with technology.

Fiat and Chrysler purchasing offices worldwide will be consolidated.

Oil pump -21%, inside rear view mirror, -33%, thermostat -19%, HVAC -6%.

Dedicating 24 purchasing experts and 40 engineers to work with suppliers, will split savings 50/50. Expect ¼ of all savings from this activity.

2010 = $600 million purchasing savings. Raw material increase = 100 million. Net = 500 million.

But they will market test prices. 2010= 2 million in savings. Have dropped 60ish suppliers on financial watch list.

Will expand supplier advisory council, meet more regularly, will do webcasts and town halls. This will happen before year is out.

Was 280 days to evaluate supplier design changes. Now 110 days. Want 50 days. Supplier quality increase by 80 experts, 45% increase by 2010, to get them involved earlier in the design process. Want $3 billion in direct material savings, $0.4b in indirect.

Peter Grady, Dealer Network Development and fleet teams.

Need best dealers in right locations, make it more productive.

Chrysler was at 21% of total dealers in US market, now 12%. From 1990 to now Chrysler got rid of over 2,800 dealers.

With Project Alpha they tried to put all brands under one roof. This became Project Genesis to get better standards.

Will get 440 sales per location, vs, 409 for Ford and 337 for GM. Will cover 58% of rural markets, higher than imports, almost same as GM and Ford.

Chrysler financial will transition to GMAC by December. 36% have ROS over 1.5% which is the NADA average; 60% will be there by 2014.

Piloting a regional business model. One main store, with stand-alone regional service facilities.

Will sell Fiat 500 at select dealers in urban markets, with dedicated sales team. Expect high level of customization.

Since June, 20 new dealer buildings with $250 m investment. Chrysler will invest $500 million in network in 5 years. $120 million next year.

Reid Bigland, Canada

Mostly small and compact cars in Canada, so Fiat will help a lot.

Chrysler 2500 Ram diesel doesn’t need urea injection.

Chrysler and fiat sales combined = 4.2 million units.

Joe ChamaSrour, Mexico

115 dealers, all Dodge, Chrysler, Jeep

Surpassed Ford in sales this year.

Mexico has free trade agreements, now being flooded by new brands. Jumped by 11 since 2003, they’ve captured 10 points of share. Was 240 models, now 333. Volume was over 1 million, now 784,000.

But Chrysler added half a point, strong in #2 SUVs, #2 pick-ups, #1 minivans/sport tourers. Getting killed in passenger cars, and that’s why Fiat will help.

In Mexico, small car segment is largest.

Expect volume to grow 43%, SOM to grow 1.1 pts. Total market will grow 30%.

Michael Manley, International

He’s in charge of everything outside of NAFTA.

2006 = 207,000 sales. 2007 = 238,000.  2009 = 215,000, about 10% of total sales.

Jeep 42%, Chrysler 28%, Dodge 30% of the share.

1,580 dealers. 60% re in Europe and Middle East, 28% S. America, rest in Asia.

Again, Chrysler’s product line-up is where the rest of the world ain’t. New line will put them into 70% of global segments.

By 2014 want 500,000 sales, about 18% of corporate total.

Jeep will get into B and C segment. will add a D-segment vehicle to complement Wrangler.

Fiat will take some Chrysler corp. vehicles, rebrand them and sell them overseas. 100% new product by 2012, 50% from Fiat platforms. Dropping Daimler for the backshop operations, and will go with Fiat.

Pietro Gorlier, Mopar

Does customer service at Fiat.

280,000 parts offerings worldwide.

Want customer retention, selling service contracts. Have sold 100,000 contracts that could generate 400,000 repeat visits.

Want time to market for parts and remanufactured parts to be faster, and use “smart pricing” to sell it.

Will put more technicians and service reps in their dealerships, and adding express lanes for oil changes.

Will offer live TV with 20 channels, called Flo TV, dealer installed.

Want 80% of dealers to stay open on weekends.

With daily deliveries, have dramatically driven down dealer inventory in parts, can boost dealer profitability with more after-sales parts and accessories.

Want to proactively reach out to customers to improve service. Will monitor service events to id potential issues. Need to personalize service to meet customers expectations. Each brand gets an 800 phone number, to meet individual brand needs.

Goal is to turn the company towards the customer.

Olivier Francois, Chrysler brand

2014 expect to double market share.

Will add Lancia products in US, and Chrysler products to Lancia overseas.

Look like badge engineered Lancias.

Will redesign current Sebring for D-segment. Refresh T&C next year.

Redesigned website. More stylish, not utilitarian., video and flash.

Want to emphasize style: asks where has style gone? Need to have to intro products like they’re on a fashion runway, not out on the highway. Will do fasion shows starting next year.

Will redesign brochures so they look highly attractive, so owners will be proud to display

them on their coffee table.

Want 214,000 sales by 2014.

New logo, no more Pabst blue ribbon look.

Joe Veltri, Product Planning

First determine opportunities in market, then decided best brand for it, then determine best platform, then make sure it falls within capital spending plans, finally ensure proper marketing support throughout life cycle.


B-class Jeep from Fiat platform in 2013

C-class             “    “       “             2014

Liberty refresh on  “        “            2013

Wrangler gets refresh in 2010, and new powertrain (diesel?) in 2011 for 70th anniversary.


B-car from Fiat in 2013, imported from Fiat. Trying to move this up.

C-car     “     “       2012

D-segment Sebring refresh in 2010, new one based on fiat in 2013

D-segment cross over based on Fiat in 2013

New T&C based on Chrysler in 2014.


Dakota dropped in 2011, Midsize unibody replaces it in 2011 under consideration.

Major refresh of light duty pick up, heavy duty and chassis cab in 2012, with possible light duty diesel.

Large and small commercial van from fiat in 2012

My guess: Iveco trucks for class 6 and above?


B-car in 2013

Caliber dropped in 2012, new fiat based car replaces it.

Avenger refresh in 2010, replaced in 2013

Journey refresh in 2010 and keeps on going

Nitro could get major refresh in 2011

Challenger gets refresh in 2011 and keeps on going

New Charger next year.

75% of total line renewed or modified by 2010, 100% by 2012. Several new nameplates in different segments in 2013.

2010: US SAAR 11.0 million

2011: 12.7 million

By 2014, expect 11% SOM at 2 million units in US. Global = 2.8 million. Canada and Mexico will shrink in % of sales, international will grow, US will grow, but with less fleet. Small cars grow from 1%. 56% of products will come from Fiat platforms.

Expect 25% fuel economy improvement.

Richard Palmer, Finance

Want 2.8 million sales in 2014, from 1.4 million in 2009.

US sales will double, due to growth in SAAR and market share gains.

Jeep and Chrysler brands will grow 18 and 20%, Ram 8%, dodge 5%. Fiat group brands will grow to 300,000 units. Sergio says 70,000 will be Alfa. Assumes 14.5 SAAR in 2014, know this is conservative, 10% below most analysts.

See no growth in Canada or Mexico.

By 2011 return to 2008 sales level for Chrysler.

Expect 11 million SAAR in 2010, Chrysler will hit 1.1 million low, 1.2 million high side.

See no growth for Dodge, will reposition it in this time.

Operating Break even in 2010. break even net in 2011. 2014 get $8 billion EBITDA

Tarp repaid by 2014.

Revenue 65-70b in 2014.

Operating profit of $14 b over plan period.

Q2 2009 0-0.5 b EBITDA

Cash balance over $5b, not including tarp.

Net debt now $8 b, by 2014 it’s $4b.

Applying for $3 b load from DOE.

Down cycle plan: (planning for worst case scenario)

20% drop in US in 2011. Would lose $1.8 billion, but could recover enough to be breakeven positive. Even in worst case, they believe they can keep $5b in cash.

Will report financial results starting Q4 2009 release by April 30, 2010. then will release 60 days after end of quarter and 90 days after year end.

Q&A With Sergio

Today’s presentation is distillation of 5 months of planning.

Have unbundled brands and products that were indiscriminately mingled together.

Fiat will hand over all large car development to Chrysler.

Says they will have much better relations with suppliers.

“I won’t tell you how much was spent on the new Chrysler 300 because it would shock you out of your pants.”  It was spent before the restructuring.

Pet peeve is proliferation of platforms. Some sitting on unique platform without any regard given to how the model line could be extended.

Mito is on Punto platform, but you’d never know it.

Can’t bring any products forward time-wise, they have stretched this organization to the breaking point.

They assume oil prices will be in $4 range for their planning period.

Wishes European government had the foresight and courage to force the Euro auto industry to go through the same restructuring the US industry has gone through. It’s going to have to go through it and the longer it waits the worse it will be. Chrysler will repay the taxpayers what they were given.

Chrysler dealer network is making money. They’re not bleeding, they’re not screaming. My problem is not providing product to the dealer.

The question of why sales collapsed in October is complicated. We’ve been incredibly quiet for last 5 months. No marketing of brands, marketing has been incredibly weak. Hopes that today’s news conference starts to change people’s perception and awareness of the brands and the products. Chrysler advertising will be different, it will break out of the clutter. If it’s any consolation, he saw the exact same collapse in sales and share when he took over Fiat. Now we’re going to make some noise out there and sell cars.

Financing and car making are two different businesses. The profits in financing covered a lot of sins in making cars, and people became enamored of the profits they could earn in recycling the money they earned in selling cars. They went too heavily into it.

So Chrysler will partner with a financing company, but it does not have to own it.

Chrysler will not pay any taxes until 2013. All earnings go to the partners. They will not have NOLs to offset earnings, all prior losses were accrued under Old Co.

Made all the sense in the world for GM to keep Opel.

Some people who bought Fiat’s weren’t satisfied with them. And I, then, was one of them. I bought a Fiat in 1968 and if someone had told me that one day I’d be running the Fiat company I would have been laughing my head off.

2 Comments to “RAW NOTES: Chrysler’s 8-Hour Press Conference”

  1. Kelly Larkins Says:

    Worked for Chrysler and feel it is a waste of money that only makes the politians auto executives look good and fool the comon guy i see Ford will be asking for money and not suprised about Penske giving loan to mayor what will he want a loan from taxpayers for Smart ?

  2. Todd McGlynn Says:

    I have a bad feeling about this. I hope all those people on the stage aren’t being payed 300,000 a year or more. This company is on the brink of disaster.