Chrysler Introduces Sleek Sedans
Automaker hopes design will revitalize moribund passenger car lineup and ease bottom line
THE success - or failure - of Chrysler Corporation's new midsized sedans depends on whether the carmaker can win over a skeptical baby-boom generation that has largely written off the domestic auto industry.
How the L/H sedans fair will likely also determine the company's future, despite Chrysler's surprisingly strong second-quarter earnings: a $178 million profit announced Tuesday.
But the boost in earnings came from Chrysler's truck and minivan lines which sold 50 percent more than its cars, demonstrating how important it will be for the automaker to revitalize its moribund passenger car lineup.
Chrysler has spent $1.8 billion to design the L/H, which will be marketed under three different brand names: Chrysler Concorde, Dodge Intrepid, and Eagle Vision.
At first glance, the sleek cars stand in stark contrast to the boxy styling of past Chrysler sedans. The cars are an aggressive example of "cab forward" design, with the engine and windshield pushed forward and rear wheels moved back to increase interior space.
"These vehicles are absolutely superb," says Joseph Phillippi, auto analyst with Shearson Lehman Brothers. "Clearly, they've got a winner on their hands."
The sentiment was echoed by dozens of other auto analysts and reporters who attended a recent preview in southern California.
But Mr. Phillippi cautions that it is not good enough to just design a great car. Chrysler is taking on some tough competition, cars like the Honda Accord and Toyota Camry, he notes.
"It's a question of convincing the 25- to 45-year age group to go to a domestic dealership" just to take a look, he says.
Chrysler will not formally introduce the L/H until election day, Nov. 3, when it will launch a big print and TV ad campaign. But as the company begins to ship the first 1,000 sedans to dealers across the country, Chrysler is already waging a campaign to win the hearts, minds, and pocketbooks of potential customers.
With more than a dozen midsized models already on the market, Chrysler will take several unusual steps to stand out:
* It will offer free, three-day test drives to more than 10,000 "opinion leaders" nationwide.
* It will mail more than a million videotaped "test drives" to potential buyers.
* It will sponsor ballets, operas, sports, and other activities hoping to reach its target market.
The marketing campaign relies on the concept of "psychographics," rather than more conventional demographics.
"You're better off separating groups according to [personal aspirations and] values rather than household income," says Steve Torok, Chrysler-Plymouth Division general manager.
The Concorde and Vision, for example, appeal to essentially the same demographic groups: mid- to upper-income baby boomers. But Vision buyers like to be the first on the block with a new car, while Concorde customers "are a little more nervous about standing out in the crowd," says Mr. Torok, who is also in charge of corporate L/H marketing.
Torok says many potential buyers are leery of domestic automobiles because of past quality problems. "They don't want to be burned twice," he says.
It could take a year to build momentum for the L/H. But it will take that long to "ramp up" production at the L/H plant in Bramalea, Ontario. The factory has a production capacity of 250,000 units a year. But by the end of 1992, Chrysler will build only 50,000 L/H sedans, each one carefully checked to make sure it lives up to the stringent standards designed into the car.
"A customer doesn't buy our drawings," says G. Glenn Gardner, director of the L/H program. "Each of those vehicles coming out of the plant must equal the best of the original design concept."
The campaign will not end at the factory. Over the next five months, every one of Chrysler's 4,500 Dodge, Eagle, and Chrysler dealers will attend a new training program dubbed "Customer One." Modeled after programs used by Infiniti and Saturn, Customer One will teach dealers how to meet the demanding expectations of today's customer. Hard-sell tactics are out, they will be told. Customer satisfaction is in.
"Our track record was not the best and we knew we needed a major improvement," acknowledges Ed Brust, Chrysler's manager of large-car platforms.
The L/H could have a significant impact on Chrysler's bottom line. Each vehicle could generate $4,000 to $5,000 in gross profits, according to analyst Phillippi. That would ease the strain on the automaker's bottom line.
Agencies like Standard & Poor's have placed Chrysler debt in the junk bond category. But if the L/H sells as well as Phillippi expects, he says those ratings will be significantly upgraded by the end of 1993.
On the other hand, if the L/H proves a failure, Chrysler will be hard pressed to raise cash for other product programs.