January 14, 2008 / 11:38 PM / in 10 years

Chrysler sees "New Day" in $150 mln in car upgrades

DETROIT (Reuters) - Chrysler LLC is readying a sweeping, $150 million package of vehicle upgrades as new owner Cerberus Capital Management puts its first stamp on the line-up of Chrysler cars already in showrooms, executives said.

The initiative, which will be marketed under the tagline that Chrysler’s new owners are ushering in a “New Day” for the struggling No. 3 U.S.-based automaker, will be introduced to Chrysler dealers next month, Chrysler executives said on the sidelines of the Detroit auto show.

The plan includes intended fixes and upgrades to over 260 vehicle features, and price changes covering 12 models.

The effort is intended to get consumers to take a new look at some of the last models rolled out under the ownership of German parent Daimler AG (DAIGn.DE) and demonstrate how quickly the “new” Chrysler can move to address problems, executives said.

Among the models that will be revamped are the Dodge Caliber, the Jeep Patriot and the Jeep Compass, they said.

Chrysler executives said the rapid move to revamp its existing vehicle lineup underscored the stripped-down management philosophy of Cerberus and a new sense of urgency at the struggling car maker under Chief Executive Bob Nardelli.

Executives said Nardelli drove Chrysler senior executives through a rapid-fire decision process on the planned upgrades, accomplishing in one meeting what might have taken 10 before.

“We have generally been pretty nimble anyway, but we have taken weeks out of our decision process,” Chrysler product development chief Frank Klegon said in an interview.

“There was no more discussion, no more let’s go to New York, or let’s go to Stuttgart or anything else,” Klegon said. “There were four or five of us at the proving grounds who decided that’s what we wanted to do, that’s what made sense and that was it, move on and start implementing.”

Cerberus moved quickly last year to install Nardelli as CEO and brought in executives from rivals such as Toyota Motor Corp (7203.T) to build an executive team for the turnaround.

“We know change will be the only constant,” Nardelli told reporters.

Chrysler executives acknowledge that it took a long time to build up the negative perceptions about American-made vehicles and also will take a long time to break it down. The rapid review of the lineup is part of that initial effort.

“It’s like eating an elephant a bite at a time,” Chrysler vice-chairman Jim Press, who was lured away from Toyota.

Several Chrysler vehicles have been criticized as having cheap interiors in recent years as the automaker’s former parent Daimler pushed to cut costs.

Chrysler is taking on that perception with the “New Day” effort, which will also simplify the packages of feature choices that consumers face in showrooms, executives said.

SAY WHAT YOU MEAN

Chrysler also aims to shore up the image of its brands, such as Jeep, after being criticized for expanding into vehicles such as the Compass that detract from its outdoor and off-road performance image.

“It’s got to be true to the brand. Don’t put Jeep on something that is not a real Jeep,” Press said of Chrysler’s emerging brand strategy.

Press said Chrysler was also committed to cutting out weak links in its product line-up in addition to the four models that it scrapped last year.

“We don’t have a timetable and we don’t know how many, but the process of rationalizing the product portfolio will carry forward,” Press told reporters.

Last year, Chrysler announced plans to cut the Dodge Magnum wagon, PT Cruiser convertible, Chrysler Pacifica crossover and the Crossfire sports car.

To free up capital for the improvements, Chrysler plans to push more vehicle parts procurement to cheaper markets where it is increasing engineering capacity this year.

Klegon said Chrysler plans to hire 900 engineers outside the United States in 2008, representing more than a 50 percent increase in Mexico, a 20 percent increase in India and almost a 30 percent increase in China.

Chrysler’s new marketing chief, Deborah Meyer, who was hired away from Toyota’s luxury Lexus division last year, said the automaker intended to make sure consumer’s got the message behind the pending product changes.

“It’s a new day for Chrysler and we are really going to celebrate it,” she said.

Reporting by David Bailey and Kevin Krolicki, Editing by Peter Bohan

Our Standards:The Thomson Reuters Trust Principles.
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