Chrysler Nissan Deal: One More Step To Oblivion For Chrysler?

Discussion in 'General Motoring' started by Jim Higgins, Aug 7, 2008.

  1. Jim Higgins

    Jim Higgins Guest

    Chrysler Nissan Deal: One More Step To Oblivion For Chrysler?
    http://tinyurl.com/6ka3xv

    The Wall Street Journal today published a story stating, according to
    un-named sources, that Chrysler is in talks with Japanese automaker
    Nissan to essentially supply the Auburn Hills, MI carmaker with
    mid-sized cars derived from the Nissan Altima.

    Such a deal would come on the heels of an agreement for Nissan to supply
    Chrysler with a version of the Nissan Versa as it next small car. In
    turn, Nissan is getting out of the business of building its own
    full-sized pickups and is going to replace the Titan (currently with
    $10,000 of incentives on it) with a version of the Dodge Ram.

    As Chrysler strikes more deals like this to have other parties make its
    cars (it also has a deal for Chinese automaker Chery to build a small
    car, but the state of that deal seems in question), one wonders what the
    company is turning into. The WSJ compared the emerging model at Chrysler
    with that of Dell Computer, which is more of a computer assembler of
    supplier parts and modules than an innovator in its own right. I might
    draw a different comparison. Chrysler is shaping up to look more like a
    Chinese state-owned automaker that relies on joint ventures with other
    automakers for new models rather than a company that will innovate on
    its own.

    That may be too harsh. After all, Chrysler figures to remain in the
    minivan business, which it has led, as well as the pickup truck business
    where it has had a niche. And it will continue to build SUVs, especially
    for the Jeep brand, which remains the company’s most valuable brand
    asset. Minivans and pickups don’t exactly look like a growth industry
    right now, but they are two vehicles that Chrysler knows how to do much
    better than Nissan.

    But Chrysler’s brands are nowhere when it comes to passenger cars. Dodge
    cars attract a very low quality credit-score buyer, and have very low
    trust, according to stats I have seen from Strategic Vision in the last
    couple of years. Chrysler brand is not much better. The newest
    models—Avenger and Sebring (pictured above)—score in the cellar on J.D.
    Power’s quality and APEAL rankings. The PT Cruiser has seen its day. And
    even the once hot Chrysler 300 seems to have lost its freshness. Even
    when the 300 was hot, it did nothing to move the numbers in terms of
    what people thought of the Chrysler brand. It was as if the buyers were
    looking past the Chrysler brand and just focusing on the 300 badge and
    styling.

    Even the current Sebring and Avenger, which would be replaced by the
    Altima derived cars if a deal is cut, were developed along with
    Mitsubishi. That program, in which Chrysler had a lot to say about the
    outcome on styling and engineering, has yielded a terrible outcome. Its
    development was undercut along the way by difficult working relations
    between the two companies. When companies and staffs are not financially
    and emotionally fully invested in the success of vehicles, expect trouble.

    I am at a loss about why a discerning customer would opt to buy a Nissan
    Versa or Altima derivative from a Chrysler or Dodge dealer. For
    Chrysler, it would seem to be a strategy just to keep the lights on for
    dealers and those who remain strangely fixated on buying Chryslers and
    Dodges even when they are Nissans. Too, the profits of such vehicles for
    the automaker are very small when you outsource a car. That means those
    cars get very little marketing support. Look at GM and the very little
    attention it pays to Pontiac Vibe, which is built in the company’s
    joint-venture plant (managed along with Toyota), and is mechanically the
    same as a Toyota Matrix and Corolla. GM makes very little on those cars,
    but they are important to GMC/Pontiac dealer sales volume especially
    when SUV sales have gone South.

    There are lots of joint ventures in the industry today. But outsourcing
    car production and engineering to Nissan--if this second deal goes
    through--looks like a strategy for treading water until the company is
    sold, stripped or more fully integrated into Nissan. It doesn’t look
    like a play to make Chrysler independent and vibrant.
     
    Jim Higgins, Aug 7, 2008
    #1
  2. Jim Higgins

    Miles Guest

    GM and Ford have been doing this same thing for many years. Foreign
    makers have done so as well (Honda selling rebadged Isuzu for instance).
     
    Miles, Aug 8, 2008
    #2
  3. Jim Higgins

    Joe Pfeiffer Guest

    For that matter, so has Chrysler.
     
    Joe Pfeiffer, Aug 8, 2008
    #3
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