Detroit Auto Show: DaimlerChrysler: Turnaround Ahead of Schedule

DETROIT January 8, 2003; John Porretto writing for the AP reports that despite forecasts for a drop in U.S. vehicle sales this year, DaimlerChrysler AG's Chrysler Group expects to increase its market share as it heads into the final phase of a three-year turnaround effort.

Chrysler president and chief executive Dieter Zetsche said Tuesday that the automaker's share growth likely will not amount to an entire percentage point, but a slight bump forward would be acceptable given the fuzzy economic outlook and the company's precarious state two years ago, when it lost $4.7 billion.

Chrysler's long-range goals call for growing volume by one million vehicles in the next five to 10 years, which Zetsche said will be done "not by buying market share but by creating demand with very specific actions, mostly product driven."

Zetsche has been critical of the onslaught of incentives used to attract buyers in the past couple of years, yet Chrysler has had to join the fray to remain competitive.

In fact, following the lead of General Motors Corp. and Ford Motor Co. in the past few days, Chrysler announced its latest buyer-enticing programs Tuesday at the North American International Auto Show.

Chrysler is now offering zero-percent financing or cash back for five years on some 2003 models, including the Concord, Intrepid, 300M and Durango. It's also offering zero-percent financing or cash back for three years on certain models, including the Jeep Grand Cherokee, Liberty and Wrangler. The cash-back offers range from $1,500 to $3,000. The incentives run through Feb. 28.

But Zetsche and other Chrysler officials at the show tried to keep the focus on the automaker's products.

Two years after the company laid off thousands of employees and closed several plants to combat billion-dollar losses, Chrysler has emerged with an enhanced lineup of stylish cars and trucks.

The automaker will begin selling the new Pacifica minivan-SUV hybrid and Crossfire sports coupe this year. Another important part of the product mix is the Dodge brand, which will add a new Durango SUV this fall and the Magnum sport wagon next year.

In a research note Tuesday, UBS Warburg said it expected the Pacifica and some other products to be well received, but that the company's new offerings in total are not enough to stave off market share loss. The securities firm said Chrysler remains too heavily dependent on light trucks, a market segment that's becoming increasingly competitive.

"The salad days are well gone for the minivan and the Grand Cherokee," the firm said.

Chrysler had 13.1 percent of the U.S. market in 2002 and saw its sales decline 3 percent. The company had an operating profit of $1.1 billion at the end of the third quarter.

In an interview Tuesday, Zetsche said the company was well ahead of schedule on two important aspects of the revitalization plan.

First, all but 1,000 of the targeted 26,000 jobs have been cut. Second, while the company initially had hoped only to break even in the plan's second year, Zetsche said Chrysler is well on its way to posting a profit in 2002.

Like most observers, Zetsche predicts overall U.S. volume will decline this year, perhaps to 16.5 million units. The industry topped 16.8 million sales in the U.S. in 2002, one of the best years on record.

"Of course, this year could be influenced by political and economic events which you just cannot plan for," he said.

In the event of a U.S. invasion of Iraq, Zetsche said it will be important to react quickly and be flexible. For example, he said, adjusting production might be necessary to avoid expensive excess inventories.