How Much Upside at Chrysler?
The only American automaker to post a sales gain in 2005, DaimlerChrysler’s Chrysler Group is looking for ways to grow. While there are some weak spots in the lineup, the company is nonetheless on a roll, analysts generally agree, as it enters 2006. Most of its factories are operating at or near normal capacity, so CEO Tom LaSorda is looking for ways to squeeze even more out of those plants, rather than adding facilities in a market with severe over-capacity issues. His goal? Add third shifts wherever possible and move increasingly to flexible facilities that can allow Chrysler to shift production to respond to swings in market demand. Adding that capacity “is free,” he said, at least if you don’t count the added workforce. Going to third shift operations could boost output to as much as 3.5 to 4.0 million, LaSorda said. The automaker isn’t likely to need that much any time soon, however. Sales last year just nudged the 3.0 million mark.
But added capacity will certainly be needed at a few key plants, such as the one in Brampton , Ont., building Chrysler’s rear-drive LX models. The 300 series is sold out and the biggest challenge for Challenger would be finding space on the line. The retro muscle car debuts in Detroit this week, and LaSorda said his team will be watching closely to see how strong the media and public react. But there’s no question that the automaker is strongly interested in finding a place in the line-up for Challenger. It’s far less likely to add the big Imperial, which was revealed on Sunday. The stretched version of the 300 was “nothing but a concept,” LaSorda stressed.
LaSorda was asked about the new joint venture with Volkswagen, which will take a version of the next-generation Chrysler minivan. VW’s global brand czar, Wolfgang Bernhard, hinted there could be future projects in store for the partners, and LaSorda cautiously agreed. “Obviously, we want to open the doors to more cooperation and work,” not only with Volkswagen, but other potential partners. LaSorda said that Chrysler likely couldn’t have developed its next-generation of small and compact cars without sharing development costs with the Japanese maker, Mitsubishi. And with the automotive market continuing to fragment, such ventures will be critical to building a business case for lower-volume products in the future.