Chrysler Hatches New “Process”

AUBURN HILLS, Mich.–The Chrysler division of DaimlerChrysler AG announced Thursday it has created a process to better develop, build and market new products.

The process is based on the creation of 50 separate product innovation teams which would work closely throughout the design, engineering and marketing of Chrysler vehicles.

“We want to ensure a balance between creativity and marketing,” said Chrysler Group president and chief executive Dieter Zetsche.

The company said some elements of the new system are already in place but customers would not see the full effect until at least the 2004 model year.

The product innovation teams will work with the Chrysler Development System (CDS) which the company says is a “process for vehicle creation from the vision all the way through production.”

CDS uses “quality gates” to make sure objectives of each program are met at each stage of development.

“You need a balanced input approach,” said Jim Schroer, executive vice president of product development and quality. “If you let design have too large a voice then you run the risk of having great-looking vehicles but lose on the financial.”

Zetsche said the new process would result in a greater “commonality” within the company which could result in sharing vehicle platforms and components with the automaker’s Mitsubishi unit.

“We see a leading role for Mitsubishi in the small car segment,” Zetsche said.

There is also the possibility of sharing components with Chrysler’s corporate cousin, Mercedes Benz, Zetsche said.

Greater commonality also would mean reducing the number of different types of the same component.

“We have 25 kinds of batteries. We need only five,” said Wolfgang Bernhard, Chrysler chief operating officer.

Zetsche declined to speculate on any cost savings for vehicle development or production.

Rich Schaum, executive vice president for product development and quality, said it was hoped the new process could accelerate the time it takes from idea to launch, with 18 months as an objective.

In January the company announced an aggressive restructuring program at its U.S.-based Chrysler division that would result in the loss of 26,000 jobs over the next three years, about 20 percent of the company’s North American work force.

The plan also calls for six manufacturing plants to be idled through 2002. Chrysler said it expects a large part of the job-cutting to be done through retirement programs, achieved within the framework of existing union contracts.

For the first six months of the year sales in the Chrysler division are down about 11 percent from the same period a year ago, although it was the only U.S. automaker to show an increase in sales in June due to the popularity of its minivans and new Jeep Liberty SUV.

Chrysler has been struggling to regain the sales momentum and profitability it enjoyed in the mid-1990’s with strong sales of its minivans and cutting edge “cab-forward” LH series passenger cars.

In 1998 Chrysler was taken over by German automaker Daimler Benz in a move that was at first portrayed by both companies as a “merger of equals.”

The company was renamed DaimlerChrysler AG and over the next two years most of the top American executives in the Chrysler division were either fired, or decided to retire or resign.

Zetsche, the former head of the company’s Freightliner unit, was appointed President and CEO of the Chrysler division last November 17 replacing James Holden who was fired by DaimlerChrysler chairman Jurgen Schrempp.

Aside from its internal struggles, the company faces a lawsuit from financier Kirk Kerkorian, one of its biggest shareholders.

Kerkorian says Chrysler shareholders were led to believe the company was merging with Daimler Benz, not being taken over, and might not have approved the transaction.

In a January speech in Detroit, Schrempp dismissed the charges saying “Chrysler enjoys equal status with its sister Mercedes-Benz division as a key pillar of our global strategy.”

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