Chrysler Likely to Overhaul Brands

NEW YORK Changes will come quickly for the Chrysler Group. The scrapping of underperforming sub-brands, streamlined marketing and design tweaks are all on the slate, analysts said.

New majority owner Cerberus Capital Management, New York, will depend on a small group of auto-savvy advisors to direct the future of Chrysler. Their charge: To transform a fiscally sagging auto giant into a revenue-producing machine once again.

The team that will help the process along includes former Ford Motor group vp, marketing and sales Robert Rewey, ex-Ford vice chairman David Thursfield, former Chrysler COO Wolfgang Bernhard and Gary Dilts, once a Chrysler svp, sales and head of dealer relations for the company. (Their exact roles have not been finalized.)

Bernhard, who was pushed out as Volkswagen’s chairman earlier this year, played a large role in the final stages of the deal with Cerberus. Some believe his presence will be felt in any changes that take place. It is almost certain that he will serve as a liaison between Chrysler and Cerberus, working with CEO Tom LaSorda, who will remain in charge at Chrysler, at least for now, observers said.

The Chrysler Group, which comprises Dodge, Jeep and Chrysler brands, has seen sales shrink 3 percent this year through April after losing $2 billion in the first quarter of 2007. Cerberus last week paid $7.4 billion for an 80 percent stake in the ailing automaker.

The first order of business will be deciding which models to send to the great parking lot in the sky. “There will be a sweep-and-keep going on there fairly quickly,” said Matt May, an auto industry consultant based in Los Angeles. “We will see the iconic brands stay and everything else will be put on trial. And whether it will stay is up to the jury, which is the new buyer. Which could well mean fewer products.” Long-suffering Dodge Durango and the Chrysler Pacifica SUVs are on the short list.

Bernhard brings with him an aggressive approach, said Bud Liebler, who left Chrysler in 2001 as svp, marketing. “Wolfgang is a risk-taker.”

One of the first moves Bernhard made when he came to Chrysler in 2000 was to help kill the Jeep Cherokee, an aging, somewhat bland SUV. His influence also held over the prospering sales of the Chrysler 300 and the Dodge Charger and Magnum.

“Wolfgang can right their product mess at Chrysler,” said John Wolkonowicz, an analyst at Global Insight in Boston. “Bernhard was the main reason for the spate of success we saw at Chrysler in the early 2000s.”

LaSorda said in a statement the different units won’t be sold off. “We will develop and define our three distinct American brands . . . They will not be broken up under any circumstance.”

Wolkonowicz predicted there will be major personnel changes across the board, from marketing to top management: “A lot of this will come from a fresh set of eyes, not a good-ol’-boy auto industry thing.”

Chrysler CMO George Murphy said he has no plans to make any changes in his ranks. As to his own future: “I don’t respond to speculation.”

Gordon Wangers, an independent auto consultant in Vista, Calif., said, “The marketing team in place at Chrysler is good. If [Cerberus is] hands off, things will be OK.” Chrysler Group spent $1.3 billion on ads last year, per
Nielsen Monitor-Plus, a drop of 9.3 percent from 2005.

Along with the scrutiny of the current staff, there also lurks an accelerated tightening of the dealer network. Managing Chrysler’s 3,700 dealerships will be paramount for new management. A move to eliminate hundreds already is in the works.