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Chrysler Shakes Up Marketing Team Amid Falling Sales
posted by admin on 21/06/06

Last year's hit, Chrysler 300C sedan, is now sitting on dealer lots for three months
DETROIT

-- Chrysler's hemi-powered turnaround suddenly looks like it's running on fumes.

In a surprise move yesterday, DaimlerChrysler AG's Chrysler Group unit shook up its top sales and marketing management, amid a rocky start to 2006 that has left the German-American auto maker's U.S. unit with hefty inventories of unsold vehicles despite rising sales to rental fleets and big discounts. In May, Chrysler's sales skidded 8.4% and are down 2.5% through the first five months of the year.

Out are Gary E. Dilts, 56, senior vice president U.S. sales, and Raymond M. Fisher, 53, vice president sales, service and parts operations. The two executives will retire effective July 1, Chrysler said.

The company said Steven J. Landry, 47, currently president and chief executive officer of Chrysler Canada, will become vice president of sales and field operations. Mr. Landry had been in the Canadian job only a few months.

Michael Manley, 42, was named vice president for sales strategy and dealer operations, Chrysler said in a statement. Both will report to Joe Eberhardt, the executive vice president for global sales, marketing and service.

A year ago, Chrysler was Detroit's only hot car company, gaining market share and making money while its larger rivals foundered. Chrysler seemed to have hit a formula for success: Offer boldly designed cars and trucks, such as the Chrysler 300 C, greenlight cheeky, sometimes borderline bawdy advertising and promote heavily what rival Japanese and Europeans didn't offer, namely a big, beefy V-8 engine nicknamed "Hemi," a name redolent of the days when Detroit iron ruled the streets.

But this year, Chrysler has hit an air pocket, presenting a major challenge for Tom LaSorda, the manufacturing expert who was given the top post at Chrysler last September after Dieter Zetsche, leader of Chrysler's dramatic post-2001 turnaround, took over the parent company. Chrysler's woes carry risks for Mr. Zetsche, too. He needs Chrysler to stay profitable while he focuses on fixing problems at DaimlerChrysler's luxury Mercedes-Benz unit. And Mr. Zetsche's reputation as a turnaround leader could get tarnished if Chrysler bogs down so soon after he leaves.
Another sign of trouble for the company: In the first four months of the year, Chrysler's sales have been buoyed by heavy sales to rental fleets. For some models such as the Dodge Stratus sedan and Dodge Caravan minivan, about half of the vehicles sold went to rental fleets.

Rising gas prices have caused sales of its Dodge Ram trucks and sport-utility vehicles to stall. A new Jeep model, the seven-passenger Commander, has fallen short of expectations, and now inventory has piled up.

Perhaps most worrying, sales of Hemi-powered cars have slackened. Last year's hit, the Hemi-equipped Chrysler 300C sedan, is now sitting on dealer lots for an average of almost three months -- about a third longer than the industry average, according to the Power Information Network, a market researcher which collects detailed sales data from dealerships. "Inventory is growing. They're piling up," said the Power Information Network's Tom Libby.

With gas prices around $3 a gallon, fewer customers are opting for the eight-cylinder Hemi, he added. For Chrysler that could have an impact on the bottom line since the engine typically adds about $5,000 to a car's purchase price.

In an interview, Mr. LaSorda said he is counting on a new marketing-and-advertising campaign to sharpen Chrysler's image while also highlighting a new round of deals coming to pump up sales this summer.

Mr. Lasorda declined to elaborate on the campaign, which will be launched in the next few weeks, but acknowledged it will include a repositioning of the company's Hemi V8 engine.

Until now, Chrysler had promoted the engine's power. But with the spectre of $3-a-gallon gas, the company now plans to emphasize the Hemi's ability to shut off four cylinders while cruising, the better to save gas.

"We haven't been telling people you can get 27, 28 miles a gallon with this thing," Mr. LaSorda said.

The success of this effort is crucial to regaining momentum. While the campaign is designed to shore up Chrysler long term, Mr. LaSorda said the key is sustaining sales during the next three to four months while the company awaits the arrival of several new models.

Among them are several that offer improved fuel economy, such as the Jeep Compass and Jeep Patriot, both compact SUVs that will be available with a new, fuel-efficient four-cylinder engine.

Perhaps the key model is the completely redesigned Chrysler Sebring, a midsized sedan that has to compete with two of the industry's megasellers, Toyota Motor Corp.'s Camry and Honda Motor Co.'s Accord as well as Ford Motor Co.'s Fusion.

Mr. LaSorda is counting on the car's looks to pull customers from the Japanese brands. It also features updated engines and an advanced six-speed transmission -- components that Ford and General Motors Corp. left out in some of their recent passenger cars.

Industry analysts cautioned that the Sebring faces an uphill task.

"For these guys to get people out of Camrys and Accords, you have to knock them out. The car has to be exceptional," said Jim Sanfilippo, executive vice president at Automotive Marketing Consultants Inc. in Bloomfield Hills, Mich.

Write to Neal E. Boudette at neal.boudette@wsj.com


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