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DaimlerChrysler: "The gloves are off for 2000"

The year-long Daimler-Chrysler marriage may have upset some Chrysler Corp. exec-utives and shareholders, but sales executives are blissfully celebrating the union."Dodge trucks, Jeeps and Chrysler-brand cars are so strong that we don't think the company and its dealers have enjoyed a better year in sales volume, profitability and enthusiasm since the Forward Look models of 1957," says M. John MacDonald,

The year-long Daimler-Chrysler marriage may have upset some Chrysler Corp. exec-utives and shareholders, but sales executives are blissfully celebrating the union.

"Dodge trucks, Jeeps and Chrysler-brand cars are so strong that we don't think the company and its dealers have enjoyed a better year in sales volume, profitability and enthusiasm since the Forward Look models of 1957," says M. John MacDonald, senior vice-president of sales and service.

What's more, new models due out early in 2000 are expected to maintain the momentum of eye-catching products, say Martin R. Levine and James R. Julow, respective general managers of Chrysler-Jeep and Dodge divisions.

They cite the 2000 Dodge Dakota Quad Cab and 2001 Chrysler PT Cruiser as examples of that.

The general managers did something unusual by presenting slide shows to the dealer councils unveiling every impending product through 2003.

"New models that far out are not generally shown to dealers," declares Mr. Levine. "But Jeep's all-time sales record this year and the Chrysler brand's best year of the decade, plus the ongoing success of the Five Star program, persuaded us to let the dealers see what they can look forward to for their own planning purposes."

Mr. MacDonald is proud of a 6.1% jump in overall DaimlerChrysler U.S. sales of cars and light trucks in the first 10 months of 1999.

The 1.6 million units retailed by dealerships, including Mercedes-Benz stores, in that period added up to a 16.8% share of the U.S. market which surprised all crystal-gazers, including those at DC.

"But the gloves are off for 2000 with the Japanese and German automakers' growing market share against the Big Three," says Mr. MacDonald.

He adds, "Our new president Jim Holden still thinks another year close to 17 million is likely, but I'm thinking 16.4 million is a good bet for 2000.

"What would be so terrible about that? We've had 15 million years since 1992, our dealers are stocking up on 2000s and folks are upbeat going into the new century."

Mr. Julow says the Dodge division has "come a long way in 10 years with segment leaders like Caravan minivan and strong entries like Durango and Intrepid."

He expects the new Dakota Quad Cab to chalk up about 65,000 first-year sales as a unique domestic four- door SUV/pickup.

Dodge truck sales, up 4.3% in the January-October period of 1999 compared to the same period in 1998, seem likely to edge past the million mark for the full year.

Ram pickups and Durangos are seeing the biggest gains from last year. The Caravan and Grand Caravan minivans contributed substantially in a segment giving minivan pioneer Chrysler a 40% share.

Even Chrysler, Dodge and Plymouth's combined car sales - not noted for their robustness - are showing some gains, from 723,153 in model year 1998 to 748,298 in the 1999 model year.

That's a 3.5% increase. The downside is that it's a slight drop in market share - from 9 to 8.7 percentage points. Plymouth sales brought the totals down. The corporation killed off that venerable nameplate last month.

With it goes the Plymouth Prowler, a retro hot rod that's one of the more daring cars to come out of Detroit in recent years.

"Prowler never was intended to be a permanent product," says Mr. Levine. Instead, he called it a showroom stimulator.

He says the "long-planned" demise of the 71-year-old Plymouth brand is not expected to hurt volume sales.

"We will eliminate the last overlap at the end of the 2000-model run when Plymouth Neon ceases," he says.

The Plymouth Voyager minivan gets a Chrysler badge from now on.

Only three Plymouth-only dealers were left when the brand's obituary was written. "They will be taken care of if another company brand can't be awarded them," a source tells Ward's Dealer Business.

Mr. MacDonald says ongoing dealership programs, such as Five Star and franchise expansion, should be enhanced as the American side of the company concentrates on only three brands now -Chrysler, Dodge and Jeep.

He says, "Five Star has 1,700 of our 4,500 U.S. dealers enrolled and 1,750 in the one-year training program. It's costly, but Five Star recipients do benefit greatly and our new top-volume dealer, Landers Chrysler-Dodge-Jeep of Benton, AR, is a Five Star enthusiast.

"We feel that Five Star benefits small-town and metro market dealers alike. Despite this past year's record dealer profits, the dealers have to advance to the next level if they want to survive until 2005."

Mr. Levine has reduced the number of Jeep dealers without Chrysler products and Chrysler dealers without Jeep products to about 300 each. He calls it "a natural transition."

Another point of pride for Mr. MacDonald has been the strong showing of Chrysler's 92 minority dealers, including blacks, Hispanics and women.

"Our minority dealer association now is offered first shot at an open point or any point that becomes available," he says.

A record-breaking first year wasn't in the cards when Daimler-Benz and Chrysler Corp. tied the knot a year ago.

Mr. MacDonald says, "But we brought two great automaking companies together in high hopes that the culture gaps would be overcome. There were plenty of problems, but we've done remarkably well in our first year together."

It hasn't been all nuptial bliss. There's been that exodus of several Chrysler executives as the German influence exerted itself on the company. It became clear that it wasn't a marriage of equals.

And Wall Street has been cool towards the merged company as DaimlerChrysler Aktiengesellschaft follows a German tradition of not disclosing as much corporate information and executive compensation as American stockholders and analysts are accustomed to getting.

Mr. Holden, who became Daimler-Chrysler president when Thomas Stallkamp got the boot, says fears of Chrysler culture's taking second place to the German business style at Daimler-Benz have been allayed.

"The objective at DaimlerChrysler is to grow all our businesses," he asserts. "1999 has seen us doing just that in the U.S., and our business model for the new century is to keep on growing."

- With Steve Finlay

Move aside General Motors Corp. and Ford Motor Co.

Co-Chairman Robert Eaton of DaimlerChrysler AG has plans. Big plans.

Asked what he wants the German-American automaker to become, he says:

"Nothing less than the No. 1 transportation company in the entire world."

That prospective top dog firm of the future would be known for "exciting dynamic products, happy customers and good shareholder value," he says.

He's confident out the outcome. "We'll get there," he declares in an interview with Ward's Communications.

The way there is with strong results and more products, according to Mr. Eaton. He sees a juggernaut in the making as new DC President James Holden and his team get more established.

Look out when that happens. "We can run all over the competition," says Mr. Eaton.

A year ago, Daimler-Benz and Chrysler Corp. stunned the automotive world by becoming DaimlerChrysler. It was a big deal. It has not been without problems, but Mr. Eaton says increased rivalry makes such mergers imperative.

"Competition is going to get tougher, and the need for a broad segment of brands to be able to expand globally is increasingly important," he explains.

He predicts more consolidation among world automakers:

"One or two of the Koreans will no longer be standing by themselves. Clearly, some more consolidation will occur in Japan. There's some to occur in other places in Asia and in Europe. So it's going to continue. How far and fast is anybody's guess."

The American side of DaimlerChrysler is concentrating on its three remaining brands - Chrysler, Dodge and Jeep - now that the Plymouth nameplate has been killed off.

About five years ago, the then-Chrysler Corp. put together a plan to revive Plymouth. They couldn't save the patient.

Says Mr. Eaton, "Even with those efforts, we felt we just simply had not been able to develop a strong image, a strong niche for Plymouth.

"We just thought we were far better off to focus on the three brands that would allow us to cover the kind of market we wanted to cover."

DaimlerChrysler, despite sales successes this year, has had trouble wooing Wall Street. Many skittish Chrysler Corp. stockholders bolted after the merger, taking their investing elsewhere.

Mr. Eaton expects that trend to about-face as investors and analysts grasp what DC is all about.

He explains, "We're a totally different company, much, much more complex, much more difficult for the analysts to understand ...

"As we become more understandable to them, as we continue to demonstrate good results and continue to bring out good products...we'll get over that. I'm not worried about it."

He originally described the DaimlerChrysler deal as a marriage of equals. But as Stuttgart began calling more shots, some observers say Chrysler is beginning to look like just a marketing division of Daimler.

Mr. Eaton scoffs at that.

"We've got a team of people here that designs over half the products of this new company, that manufactures over half the products, that procures over half the parts and sells over half the products. So why would somebody say that?"

Meanwhile, he's not keen on one of the more popular automotive marketing trends - leasing:

"I must say I'd rather sell a vehicle once and be done with it. But for some people, leasing is a more convenient way. They clearly don't have to worry about the disposal of the vehicle when they get done with it.

"Leasing is here to stay, but I don't think it's any big trend right now."

He concedes leasing can build some customer loyalty. "But you've got to work as hard to build it in other areas, so I don't see there's a big advantage. It surely is not a core to our strategy of going forward."

TAGS: Dealers Retail
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