Forbes Magazine on Chrysler's Demise

Date 2000/10/16 0:00:00 | Topic: Miscellaneous


We recently came across an outstanding Forbes.com article regarding the demise of the Chrysler name since the creation of DaimlerChrysler. The article is critical of Jurgen Schrempp, the German CEO of the multi-national company for all but ignoring the people who made Chrysler great and just concentrating on the factories and hardware. Here's an excerpt:

The Chrysler that Daimler bought is dead. The recent resignation of Thomas Gale, the great Chrysler designer, brings that home as nothing else could. This was the mistake Jurgen Schrempp made when he bought Chrysler: He didn't realize it was the people who counted, not the factories, which were old, or the sales and profits, which could come and go. The people and the leadership are the heart and spirit of the Detroit automaker, and when they go, all that is left are old factories and problems.

Investors seem to realize this. They have, in effect, written the entire value of Chrysler down to zero. Since Daimler bought Chrysler for $37 billion its market value has shrunk by $35 billion.

The managers at the old Chrysler were unique. I never saw anything like them in all my years covering the industry. There wasn't one man like Lee Iacocca. It was a team. They didn't always agree, and I'm not sure they liked each other. But how they worked together!

I likened them to the musketeers. Robert Lutz, the vice chairman who was pushed out, was D'Artagnan. His three fellow musketeers were Tom Stallkamp, thrown out as president of DaimlerChrysler; Francois Castaing, the great engineer who invented the modern system of creating new products, who resigned, and now Tom Gale, who oversaw the design of the PT Cruiser and all Chrysler vehicles.

Whatever Schrempp has now, it's not the Chrysler he bought. Of course, this isn't the first time in corporate history that a merger has been followed by the departure of talented people. But there are some real problems.

Some of Chrysler's key products are old or are facing greatly improved competition. These include the Dodge Ram big pickup truck and the Jeep Grand Cherokee. These are the big profitmakers. The cars are dying out.

Worse, from all I've heard, Chrysler morale is shot, and the daring and imagination of the old Chrysler seem to be buried under German management. Schrempp badly needs that daring and imagination, but he doesn't seem to know it. Maybe it's because he never knew how bad Chrysler could be. He never drove a Plymouth Volare or a Dodge Aspen, or watched them rust. Chrysler could turn out dogs like those again.

There are some pluses, however:

The Chrysler design team is still tops, better than almost everybody. Tom Gale hired well.

The company has the hottest car in the world, the PT Cruiser. Of course it's impossible to say how well the Germans will exploit the PT. The dream of a PT convertible is dead, and there will be no PT woodie.

There are some new products coming in the next few years, like a redone Jeep Cherokee, a new minivan, rear-wheel-drive cars and a couple of crossovers (meaning a car-based, four-wheel-drive vehicle). A new Dodge Ram pickup is also on the way.

But some of these products (like the PT Cruiser) are creations of the departed team.

Be sure to check out the entire article.





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