Chrysler's Climb Back From Bankruptcy Continues

Tim Healey

W

hen Walter Chrysler rescued the struggling Maxwell-Chalmers company in 1923 and reformed it into Chrysler in 1925, it marked the first of several corporate restructurings for Chrysler. It's remarkable that the company has survived so much change over the years. Yet survive it has.

No one tries to sugarcoat the Cerberus era and the company's plan doesn't just depend on making good cars, but also clearly defining what each brand's role is within the company.

When Chrysler entered a federally managed bankruptcy in 2009, it appeared that the brand might not survive. General Motors, which was entering a similar bankruptcy, appeared to be on better footing, due to its size and a product renaissance that began around 2006. Chrysler had neither advantage on its side, since it didn't have as many brands and its product cupboard had been left relatively bare due to its time under the ownership of Cerberus Group.

Before the financial collapse of 2008, Cerberus had high hopes of buying Chrysler low, keeping costs down, and then selling high as part of a leveraged buyout. Before then, Chrysler had been merged with Daimler, although in my view, the merge looked more like a buyout.

Chrysler is now allied with Fiat in a partnership that's meant to help guide the company out of bankruptcy and back to solid footing. It will take a few years before we'll know how successful the effort is, but from where I sit, it looks good so far.

Compare that to the Lee Iacocca-led federal bailout of the late '70s/early '80s. After recalls of the Dodge Aspen and Plymouth Volare cost Chrysler millions, Iacocca was not only able to get government money from the Carter administration and a stingy Congress. He also presided over the company as it brought the minivan into the mainstream and took advantage of recession-weary buyers with the efficient and inexpensive compact and mid-size K-cars.

The K-Cars were followed by the first Chrysler minivans, and then Chrysler purchased American Motors. Although AMC and Eagle are no more, Chrysler did keep Jeep.

Chrysler's success didn't last though, thanks to an incident in which thousands of cars were test-driven with disconnected odometers. Not only that, but Iacocca stepped down a few years later. The Daimler merger, which began in 1998, was an up-and-down affair, with some product successes (such as the Chrysler 300) and some failures (such as the Chrysler Crossfire). That led to the eventual sale to Cerberus.

Chrysler has been to the brink and back once already, so that might give some folks pause. After all, the company was strong in the '80s and hot in the '90s, and it still went bankrupt.

This time, though, I think Chrysler will be better off. That's partly because the company's products are solid, but it's also because the marketing message is strong, and the execs and other employees I've spoken to seem to be aware of the company's past missteps and mistakes. Not only does the company seem focused on making good product decisions (and good products), but it also seems better prepared to avoid the corporate mistakes that hurt it as well. Labor costs are also under better control due to the bankruptcy, and that can't hurt.

No one tries to sugarcoat the Cerberus era and the company's plan doesn't just depend on making good cars, but also clearly defining what each brand's role is within the company.

Dodge remains the mainstream brand, and the company is giving it a bit of a performance theme with sporty designs. Chrysler will represent the luxury market, and Ram has become the truck brand, as opposed to the truck model sold under the Dodge brand name. Chrysler's performance arm, SRT, has also become its own brand, although some confusion exists because certain Dodge and Chrysler products get tagged with the SRT badging, and the first true SRT product, the Viper, hasn't launched yet.

Jeep remains the off-road brand, and Fiat swoops in as the stylish and sporty foreign brand, although the sole American Fiat for now is the 500.

The new arrangement is not perfect. I am not sure consumers will respond to Ram and SRT as their own brands, or if they'll even notice and/or care. It remains to be seen which Fiat vehicles will come here and how they'll be branded--will Alfa Romeo return to our shores? What about Lancia? I've also heard grumblings that Chrysler is planning to reduce its presence in the minivan market, and that seems like a mistake because of the company's strength in that segment, not to mention that Chrysler is the company that popularized the mommy-mobiles.

Chrysler also needs to step up its green-car game with a viable hybrid or electric vehicle. The upcoming Grand Cherokee diesel is a step in the right direction, but no full-line automaker can be truly taken seriously without a strong alternative-fuel entry. That's especially true in this case, since some of Chrysler's great performance products (Dodge Challenger SRT8, Dodge Charger SRT8, et cetera) guzzle fuel.

Still, the early product returns are encouraging. Jeep's current Grand Cherokee was already under development before the bankruptcy, and the finished product is a strong competitor in the five-seat mid-size SUV segment, delivering the first version of the solid Pentastar V-6 engine to the world. Dodge now has a real compact car in the form of the Dart, which makes me forget about the regrettable Caliber. I've been impressed with the Fiat 500, and I'm glad that 2013's 500 Turbo will bridge the gap between the civilized "regular" 500 and the rowdy Abarth. And the Charger and Chrysler 300 are very good, even if they are among the last large rear-wheel-drive sedans standing.

Chrysler even managed to give the besieged Sebring a makeover and bring it back to respectability while renaming it the 200, and its sibling, the Dodge Avenger, also benefitted from the refresh.

I'm curious where Chrysler goes from here. A product plan presented by Chrysler in 2009 suggested that either the Chrysler Town and Country or Dodge Voyager would die, and Chrysler Group boss Sergio Marchionne has hinted that the T&C would be killed and resurrected as a crossover. Jeep still has to figure out what to do with the aging Patriot and Compass, and a new Liberty is on the way. Perhaps a compact Jeep pickup is, too. And both the Avenger and 200 are in need of a major redesign.

I still think the arrow is pointing up, though. The company's work on the Dart shows that there is hope, and the marketing campaigns show that the company is self-aware enough to know where it's been in the past and where it plans to go in the future. There's no spin, just a dogged focus that's common to underdogs who've been kicked around one too many times.

As auto journalists, it's easy to root for companies to survive, since we need cars to write about, and most of us have connections in one way or another to virtually every brand, usually in the form of a car we once loved. It was sad when Chrysler killed Plymouth. Thankfully, I don't foresee that sadness in Chrysler's future this time.

Walter Chrysler can rest easy.