Posted By
KIM KORTH
on
3/18/2010 9:55 AM
One of the questions we are most frequently asked is “Will the Fiat/Chrysler entity survive?”, to which I admit we do not have a universal answer in our office. We have one camp that is more pessimistic and skeptical given the enormous deterioration in market share for Chrysler the last few years and the lack of talented resources to pull off a highly ambitious agenda of significant product refreshes and new product launches. I am at the other end of the spectrum for a number of reasons:
First, the more I hear Sergio Marchionne, the more impressed I am by his grasp of the business and his focus on a very reasonable and comprehensive turnaround plan. You have to love a guy that is capable of quoting Bruce Springsteen and Nietzsche in the same speech (in Detroit earlier this week). His combination of deep intellect and ability to articulate complex matters is a real rarity in car company leadership. As an example, when asked about the low market share of Chrysler in January, he responded “Our numbers reflect what the market will bear for a non-drug-induced (i.e. incentives) market demand.” While that might sound like spin, he made it clear that he is committed to moving toward a demand pull vs. production push business model. He also reiterated his concern that the continued economic recovery would seduce both OEMs and suppliers into not addressing fundamental flaws in their business designs. “Recovery is the opiate of a dysfunctional industry.”
Second, if you have interacted with any members of the Chrysler leadership team in the last few months, you can really feel the passion and commitment to make Chrysler a success again. These guys (and they are almost universally guys given Mr. Marchionne’s one apparent character flaw) are excited about what they are doing and exude a belief that all of their efforts are going to work. While much of this new behavior has yet to reach the lower ranks of the organization (where most suppliers interact), it is clear Chrysler is headed back toward the “Stallkamp days” of partnering with suppliers and away from the highly destructive Nardelli period.
Lastly, it doesn’t take a lot of improvement for Chrysler to stabilize their market position and buy themselves time to integrate the Fiat Chrysler lineup and transform their North American “go to market.” For Chrysler, 1.2 to 1.5 million units in North America is a very reasonable expectation as the overall market returns to levels of 12-14 million units. That is why I am recommending to our clients that they return to viewing Chrysler as a viable customer target and they take them off the no bid list. Chrysler needs good suppliers to survive and they are increasingly demonstrating they deserve the support.
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