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Published: Wednesday, 1/13/2010

Chrysler CEO expects 2010 to be bumpy ride

BY LARRY P. VELLEQUETTE
BLADE BUSINESS WRITER

DETROIT - The top executive of Chrysler Group LLC warned yesterday to expect further shutdown weeks at the automaker's manufacturing facilities and said that sales for the first half of 2010 would not keep pace with the same period a year ago.

Sergio Marchionne, chief executive officer of both Chrysler and its Italian partner, Fiat SpA, said he could continue to idle plants until sales recover.

"If I need to shut the plants, I will," Mr. Marchionne told reporters at the preview of the North American International Auto Show in Detroit.

"I won't turn this into a distribution machine, because I know that I can't make money" manufacturing vehicles that aren't being ordered by dealers or customers, he added.

"There's no use producing cars that people aren't willing to [buy]. I hate to be this crass, but I need to run this business to make money. I need to make a buck."

Mr. Marchionne said the first half sales for Chrysler in 2009 were a fantasy of unprofitable incentives and wholesale pushes intended to show volume that wasn't there prior to the automaker going into bankruptcy in April.

Comparing first-half sales in 2010 to last year will continue to show a decline because of that, but it is necessary to "clean up" Chrysler's product portfolio and spur retail sales again, Mr. Marchionne said.

"I think the first half of 2010 is going to be more difficult than the second, simply because the prod-uct offering doesn't start delivering product until the second half," Mr. Marchionne said, adding that the second half is when the new Jeep Grand Cherokee becomes available.

"The first half of 2009 was Disney World," Mr. Marchionne said. "We were pumping out cars at the speed of light with incredibly heavy discounting attached, so the volumes were absolutely unnatural. I can replicate that world, but I know that I can also replicate the bankruptcy if I do that."

Asked about Chrysler's lagging sales and its future, the Chrysler CEO was blunt.

"I've got to be able to get to next Christmas," Mr. Marchionne said. "Our intent now is to use this period of time to rebuild this connection back to the customer. It's not a miracle. It's going to be a tough year.

"I didn't show you a car that we're going to launch in 2012 because it's no use. We've got to be able to get through this year and be able to get to the next auto show with a completely revamped product offering that you'll see down on the stand at the time."

Mr. Marchionne added: "I think we need to keep our head down, execute, and deliver. That's how we sell cars. You can't sell dreams."

While not addressing Toledo's four-area Chrysler plants specifically, Mr. Marchionne said the new Fiat-provided automotive platform that will anchor the next Jeep Liberty eventually will be used to build about half of all of the automaker's cars and sport utility vehicles in North America, known as "C-segment" and "D-segment" vehicles.

That could mean that Chrysler's Toledo North Assembly Plant, where the Jeep Liberty and Dodge Nitro are now manufactured, would be flexible enough to build the Liberty as well as sedans, crossovers, or other SUVs on that same platform, should Chrysler choose to do so.

As for the Jeep Wrangler, Jeep brand President and chief executive Michael Manley said the off-road vehicle would undergo a year of overhauls to its interior and powertrain, starting this summer.

"What you can see when you get it is that directly addresses some of the customer feedback we've received since we launched Wrangler," Mr. Manley said.

"That's a very, very important refresh for Wrangler, and we follow it up next year when we complete the process on Wrangler and really deliver everything that the off-road enthusiasts are looking for in this vehicle," Mr. Manley said.

Chrysler executives said dealers have responded positively to another Toledo-made product: the beleaguered Dodge Nitro SUV.

Chrysler rolled out three new Nitro variations last week, beefing up the vehicle's standard offerings and differentiating it more from the Jeep Liberty.

"We're repositioning that vehicle as a lifestyle vehicle, so it comes now standard with the 4.0-liter engine, which is what Dodge is all about, and standard with 20-inch wheels," said Ralph Gilles, who is the president and chief executive officer of the Dodge Brand.

"We're seeing a lift. We got 2,300 orders in a week for that vehicle. Just from those little tweaks, the dealers responded," Mr. Gilles said.

Contact Larry P. Vellequette at:

lvellequette@theblade.com

or 419-724-6091.



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