Taking the "Crisis" Out of "Chrysler" (Part 2 of 2)

Chrysler has been drowning. It's not a big secret.

In 1999 - the first full year they were part of DaimlerChrysler - 2.6 million Chryslers, Dodges, Jeeps, and Plymouths were sold in America. For 2009, they may sell 900,000. If they're lucky. In the last 3 years alone, sales have dropped a staggering 58%.

As has been discussed before, this cliff dive is due to a variety of factors. The biggest among them is that, with few exceptions, their current product line is woefully behind the competition in nearly every measurable way. Quality isn't there. Reliability has been at the bottom of the barrel. Design execution has been subpar. Fuel economy is no great shakes. And for the 4 months between their emergence from a quick-rinse bankruptcy, and last month's release of their "5-year plan", they hadn't spent money to advertise their rag-tag group of misfits.

All the while, reports of angry, jettisoned dealers and Obama officials admitting shock at how far-gone Chrysler was when they stepped in has filled the void in airtime and column inches that their advertising would have otherwise occupied.

The rank ineptitude of the Daimler management at Chrysler was hugely responsible for the bad product decisions that pushed Chrysler to the brink. And when Cerberus took the company over in 2007, they brought in their own group of incompetent managers that only cut employees, plants, future vehicle development, and other costs to the bone.

So, since the year began, the bankruptcy court has decoupled Chrysler from Cerberus. The Feds have thrown them a multi-billion dollar life preserver. And Fiat has pulled America's third-biggest car company, floating listless in a heavy sea of fierce competition, aboard its own recently-mended ship.

CEO Sergio Marchionne's plans are certainly ambitious. He has acted fast, ending engineering alliances with Renault-Nissan, Mitsubishi, and Hyundai, and starting Chrysler on a path of better integration with Fiat AG.

But will the company once known as "Fix It Again, Tony" be any better for Chrysler than Daimler was? In a word: Yes.

The Plane Has Crashed

Call the folks in from National Geographic Channel's Air Crash Investigation. It looks like we have some wreckage to survey.

Just this last Friday, General Motors announced that they were beginning the process of closing down Saab Automobile's operations for good. This comes in the wake of a breakdown in talks with Saab's latest would-be suitor, Dutch sports car maker Spyker. But Spyker was only the latest in a long line of potential benefactors that expressed interest in scooping up GM's ailing Swedish near-luxury brand. Just three-and-a-half weeks ago, talks also broke down with Swedish cottage-industry supercar manufacturer Koenigsegg.

Chinese automaker BAIC was in the mix, as well, and managed to get its hands on the tooling Saab was using to build the 1998-09 9-5 and 2003-06 9-3. They just announced that their Saab-based vehicles will be breaking cover from Beijing as soon as 2011.

Another Chinese automaker, Geely, also raised its hand to bid for Saab back in May. That didn't work out, either, and now Geely is going after Ford's Volvo division. And a couple of US investment groups, Merbanco and Renco Group, tried throwing their hats in the ring, as well. But no deal could be finalized. With the dissolution of talks with Spyker, a post-bailout-and-bankruptcy GM decided to leave its expert loss-making Saab brand without a safe runway at which their troubled craft could land.

Until now. Maybe.

If this all sounds like a mess, you're right. It is. But things with Saab didn't used to be so bad. The quirky automaker had far better, more stable days.

Who Put the "Crisis" In "Chrysler"? (Part 1 of 2)

The Chrysler Corporation is an 84 year-old with Bipolar Disorder. There is no better way to describe the company.

Their history reads like a giant roller-coaster ride of manically high highs and depressively low lows. In the last 30 years alone, Chrysler has been at death's door 3 separate times (1979-81, 1990-92, 2007-present), and taken US Government bailout money twice (in 1980 and 2008/9).

They were on the ropes in the early 1960s because they downsized their cars when everyone wanted them bigger and more powerful; the early '50s because they'd restyled the entire line way too conservatively for the first "Age of American Excess"; the mid-'30s because they'd practically bet the farm on odd-looking aerodynamic "Airflow" cars that were too far ahead of their time for people's tastes; and were founded by Walter P. Chrysler in the midst of the collapse of Maxwell-Chalmers in the mid-1920s.

But their highs have been incredible. After being saddled for half a decade with stodgy designs, Chrysler debuted new "Forward Look" cars in 1955 and '57 that sent GM and Ford scrambling to compete. Chrysler's longer, lower, wider designs, advanced engineering, and pioneering features pushed Plymouth, Dodge, DeSoto, Chrysler, and Imperial sales through the long, sweeping roof and set trends the industry would follow for years.

The late '60s and early '70s were kind to Chrysler, as well. Their big and midsize cars got slick "fuselage" styling. Their muscle cars were hot and there were plenty of them (Duster 340, Barracuda, GTX, Road Runner, Superbird, Challenger, Charger, Charger Daytona, Coronet Super Bee, and Sport Fury GT). Their all-new trucks and vans were winning people over. And their compact Darts and Valiants were selling out to the bare walls.

With Lee Iaccoca at the helm in the '80s, Chrysler climbed out of the grave by introducing the popular, economical K-Cars, the reintroding the convertible, and inventing the minivan. Chrysler came back quickly enough in the '80s to repay their government bailout loans ahead of schedule. They were doing so well, in fact, they went on to purchase American Motors, the fourth volume American vehicle manufacturer, in 1987, and picked up AMC's hugely profitable Jeep division for $1.1 billion in the process.

And as recently as 1998, the smallest of the Detroit Three was the most profitable among them. Chrysler had been totally turned around from its early '90s slump by offering swoopy "cab-forward" sedans (e.g., Dodge Intrepid, Chrysler Cirrus, Plymouth Neon), "rule-changing" Ram pickups, minivans for which they'd "thought of everything", and wild concept cars like the Viper and Prowler that were brought to production largely unchanged from their show car forebears.

So, what happened this time? Why is Chrysler once again swirling the drain, taking bailout money, and producing lousy, unimaginative products? Hadn't they learned their many lessons from the past?They probably had, actually.

Why GM would really rather have Buick

copyright GM Corp.

Since GM announced the phaseout of the Pontiac brand, many automotive enthusiasts have been scratching their heads.

"Why oh why", they ask, "is GM keeping Buick, a brand with one foot in the grave and customers to match, while they kick a storied performance brand like Pontiac to the curb?" Their songs of lament are beginning to sound the same.

Verse One usually invokes all the Pontiac patron saints, from the canonized (GTO, Firebird, Trans Am), to the merely venerable (Grand Prix, Bonneville), to the dubious (Fiero). As they don their sackcloth and plop down on piles of ashes, the Disciples of Pontiac start Verse Two, which tells of the recent introduction of the critically acclaimed G8 and Solstice and the justice they've done to the brand's good name. And throwing dust into the air, they flow into Verse Three, mourning the unkept promise of a future wherein Pontiac would become a performance car-only "niche brand". A future with nary a re-grilled Chevy Aveo (G3), Cobalt (G5), or Equinox (Torrent) to be seen. A promise GM couldn't afford to keep. And in between each verse is a rousing chorus of "Why oh Why", sung with crocodile tears flowing. It's getting a little old.

Truth be told, it was a sad day this last April 27th, when GM announced that they were pulling the plug on one of their most damaged, yet storied and dynamic brands.

Started in 1926 by GM as a companion marque to now-defunct Oakland, Pontiac (after the Native chief, and an Oakland County, MI town) enjoyed an 84-season run. In fact, the last arrowhead badge was just affixed to a white G6 sedan, which left the Fairfax, KS assembly line on November 25th, 2009.

Since the late 1940s, Pontiac lived a rung above Chevrolet and below Oldsmobile on the GM brand ladder. By the mid-'60s, they were known as GM's rebellious "We Build Excitement" division, and they had stuff like the GTO and Firebird to back up their claims. But when the oil embargo of 1973-74 hit, fuel prices skyrocketed. And Pontiac began a struggle to stay true to its performance image while offering cars with enough economy to satisfy customer demands. It was a battle they'd eventually lose.

Conversely, Buick was started in 1903 by David Dunbar Buick, and was the company from which General Motors sprang in 1908. Later that year, Buick bought out an independent Oldsmobile, and the new company picked up GMC Truck, Oakland, Cadillac, Chevrolet, and others between 1909 and 1917. Since the founding of GM, Buick has been positioned as an upscale brand, slotting above Oldsmobile and below Cadillac in the GM hierarchy.

Up through the 1970s, Buick enjoyed an enviable reputation as a builder of large, powerful, high-quality, plush cars. They became known as "doctors' cars", as they were often the choice of professionals who appreciated the finer things, but didn't want their clients to think they were making Cadillac-type money off of them. Buick's long-held tagline, "Wouldn't You Really Rather Have a Buick?" perfectly encapsulated the understated, aspirational quality of the brand. And the formula worked for a very long time. Buick sales peaked in North America in 1984, with 1 million cars bearing the tri-shield sold that year.

However, in the years since, GM has seen their market share erode to the imports while the piled on other responsibilities. At one point, Buick was one of 9 North American vehicle divisions GM had to juggle. GM would cope by giving each division the same basic vehicles, in order to hold down costs. Yet each brand had to figure out a way of differentiating their vehicles from their sister brands' in hopes that each brand's lineup would attract a different set of customers and thus prove its worth. But with eroding share, the shrinking pot of money GM had meant that less and less could be allocated to each brand. So the differences between Chevys, Pontiacs, GMCs, Oldsmobiles, Buicks, and Cadillacs became very muddled as GM added Saab, Saturn, and Hummer to the portfolio.

With this business model, Buick became the brand full of sensible shoes, wallowy sedans with bench seats, column shifters, and wire wheel covers. They were cars that were meant to attract the hats-in-the-back-window crowd. And it worked. By 2000, Buick's average buyer age was 67 years old, and sales were less than half of what they'd been 15 years earlier. Since 2000, Buick sales have fallen another 60%, as they managed to move barely 200,000 vehicles in the 2007 model year. The problem with GM's strategy for Buick was that the brand was positioned in such a way that it stopped being relevant to younger buyers. Ignored were demands for console-mounted shifters, bucket seats, alloy wheels, and firmer suspensions that prevented their cars from cornering on their chromed doorhandles. All the while, the customers Buick was attracting were literally dying off.

So it's understandable why some people, particularly the Pontiac faithful, would be confused about why GM kept Buick, but deep-sixed Pontiac. Dig a little deeper, though, and the logic presents itself. Let me explain.