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Published: 10/31/2013 - Updated: 5 months ago

Missteps cited in Jeep launch

Year-long void in SUV segment called mistake

BY TYREL LINKHORN
BLADE BUSINESS WRITER
Jeep Cherokees are transported to Cassens Transport Co. on Matzinger Road,  Wednesday, October 23, 2013. Jeep Cherokees are transported to Cassens Transport Co. on Matzinger Road, Wednesday, October 23, 2013.
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The chief executive officer of Chrysler Group said Wednesday it was “naive” to think introducing a complex new transmission in the Jeep Cherokee would go seamlessly.

“We have had zero issues in terms of the industrial machine itself and the ability to produce the transmission,” Sergio Marchionne said. “What we have had issues with is in fine-tuning the application of this transmission to a complex vehicle of the caliber of the Cherokee.”

Chrysler engineers spent months tweaking the way that nine-speed gearbox worked in the new Jeep. The company just last week began shipping the Cherokee to dealers, much later than planned.

Jeep had been without a comparable vehicle since the end of last year, effectively taking itself out of one of the fastest-growing segments in the industry.

Now that the Cherokee is finally hitting showrooms, Mr. Marchionne admitted Chrysler made mistakes in the way it brought the new vehicle to market.

“What we’ve learned, I guarantee you, we’ll never repeat it. We’re never going to take a plant down for over a year and be out of the market as we have been,” he said on a conference call outlining the company’s third-quarter performance.

To build the Cherokee, Chrysler needed to significantly update and expand a portion of its Toledo Assembly complex, ending production of the Jeep Liberty in August, 2012. The plant was shut down for months while workers installed new equipment and reconfigured the line.

That left the company “naked for the whole of 2013,” Mr. Marchionne said. Through September, 2012, Chrysler sold 63,674 Liberty models. Through September of this year, the company sold 6,101 — and just 34 in September itself.

Some of the delays on the Cherokee were attributed to the complex nature of its driveline systems, but on Wednesday’s call, officials said the complexity may be a bit exaggerated.

“What made this unnecessarily unique and I think painful for all of us is the fact we were introducing a never-installed transmission,” Mr. Marchionne said.

Chrysler expects to use the transmission — which it insists is a good one — in multiple vehicles. Officials said Wednesday they expect the manufacturing complex in Kokomo, Ind., to eventually build 2 million of the nine-speed transmission annually.

In spite of all the troubles with the Cherokee launch, Chrysler is predicting a strong fourth quarter.

The company expects to ship 750,000 vehicles worldwide in the quarter. If it reaches that — and officials are fully confident they can — it would be a record for Chrysler group. Chrysler shipped about 600,000 vehicles in the year’s third quarter and 613,000 in last year’s fourth quarter.

To get to three quarters of a million shipments, Chrysler is going to need meaningful contributions from the Cherokee. The company says the vehicle should be in dealerships in volume by mid-November, and Mr. Marchionne said there is high demand.

There certainly seems to be an adequate supply. Officials said up to 30,000 Cherokees were built before the first one shipped. Vehicles are now being shipped to dealers from holding lots and the Toledo plant itself.

That’s a welcome sight for Mark Epley, UAW Local 12’s Jeep Unit Chairman.

“They’re shipping every day, as many as they can get out of here on rail cars and trucks,” Mr. Epley said. “We’re really excited about them getting out to the public.”

Mr. Marchionne said the plant’s two shifts are building about 1,000 Cherokees a day, six days a week. The CEO hinted that more production could be coming next year, though he didn’t mention specific plans.

Chrysler Group has big plans for Jeep. Worldwide Jeep sales were about 702,000 last year, and officials set a goal of 800,000 worldwide sales this year. Through the year’s third quarter Chrysler has sold 531,000 Jeeps worldwide.

Hitting that 800,000 goal this year may be out of reach. However, Mr. Marchionne said he believes he can sell approximately a million Jeeps worldwide next year.

Contact Tyrel Linkhorn at: tlinkhorn@theblade.com or 419-724-6134.



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