Chrysler Intends to Save by Using 'Imported' Parts

To cut costs, Chrysler is outsourcing beyond North America and employing frugal plans to reduce expenses by $1,000 per vehicle.

"We are willing to import with the focus on being competitive," said Tom LaSorda, Chrysler head during the Beijing International Automotive Exhibition. LaSorda also stated that within 6-12 months, Chrysler would point out cost reductions averaging $1,000 per vehicle, a portion of which comes from outsourcing. He added, "We are going to source where we can get good low-cost components and high quality."

LaSorda also noted that the automaker will concentrate on increasing sales beyond North America. It can be recollected that in said territory, Chrysler usually generates 85-91 percent sales.

Further, LaSorda reported talks about a production alliance with China's Chery and a non-Chinese company. However, LaSorda did not give further detailsabout the possible alliance. Chrysler, an American automobile manufacturer, existed independently from 1925 to 1998. Then, Chrysler and its subsidiaries became part of DaimlerChrysler AG when merger with Daimler-Benz was acknowledged in 1998.

It can be recalled that last year was one of the most remarkable years for Chrysler. Last year, a bench trial in Wilmington Delaware has started. The parties of said trial are Kirk Kerkorian and DaimlerChrysler AG. It was all about the allegations about Jürgen Schrempp of Daimler Benz AG, regarding uttering lies and manipulating the Security and Exchange Commission as well as the Chrysler Corporation's shareholders. Kerkorian was one of the biggest stockholders then. Said case delved on merger of the companies as a merger of equals and not an outright acquisition. Further, the judge favored DaimlerChrysler. Nevertheless, another case was amicably settled for $300 million in 2003.

Nowadays, Chrysler takes extra effort to clear the clouds blurring its reputation. It is also concentrating on how to cut costs without compromising the quality of Chrysler car parts hence; the decision of outsourcing from other territories.

Critics in the auto industry are eyeing on the workflow and performance of Chrysler vehicles. Moreover, the automaker is struggling to put up a good fight with other automakers. Now it is devising several plans to augment its production and sales.

By Joe Wayne.

"Detroit Disease" Inflicts Chrysler

Chrysler was once admired for its toughness even at a point where the atmosphere is attracting slumping sales and massive losses. Nonetheless, according to some analysts, it seems that Chrysler has lost its protective cloak and eventually been inflicted with the so-called 'Detroit disease'.

Automotive reports are showing that Chrysler will lose $1.5 billion in the third quarter, about more than twice what it had expected beforehand. This loss is brought about by the slow sales of gas-guzzling trucks and SUVs.

According to Tom Appel, editor of Consumer Guide Automotive, "The company has been hit especially hard by the public’s growing desire for smaller, fuel-efficient cars. But the issue may be more one of a perception than a reality."

“I think Chrysler’s being hurt by a general impression that its large and hitherto well-received cars like the Chrysler 300 and the Charger are not very fuel-efficient, and so there’s a bit of a backlash,” Appel added.

Chrysler President and CEO Tom LaSorda said that the company intends to become more competitive internationally with a portfolio of smaller cars. “We’re addressing those issues and moving our product portfolio to a mix that’s more in line with the recent realities and market trends,” LaSorda elaborated.

"But while new products are important, Chrysler, like Ford and GM, needs to do a better job of managing its car and truck inventories with flexible manufacturing processes like those used by Asian manufacturers," said Kevin Reale, research director for AMR Research.

Analysts are also saying that Chrysler lineup has other problems. One problem is its limited offer in the midsize SUV market. On one hand, the sales of Dodge Durango have dropped off abruptly. To circumvent the decline in sales, the automaker is modifying the Chrysler auto parts to set forth a striking lineup.

New Chrysler products that will be launched this year include Sebring sedan, Jeep Compass, Jeep Patriot and compact Dodge Caliber. “Dodge is about to launch the mid-size Nitro SUV, so that will help them in the fuel economy perception area, but when it comes to minivans someone has to come up with something new,” Appel added. “The expectation is that the new Dodge Caravan and Chrysler Town & Country minivans will be that new thing, but their release is still some time away — they’re not supposed to come out until mid-2008.”

By Sarah McBride.