Chrysler steers toward quality control, K-cars to get back on profit road
Will the new front-wheel-drive compacts, the so-called K-body cars, along with federal help to the tune of $1.5 billion, save Chrysler Corporation? A year ago, before the current recession and auto sales slump, the new fuel-efficient '81-model replacements for the Dodge Aspen and Plymouth Volare might have made a difference. Chrysler still hopes they will.
To improve the chances for success, both Chrysler and the United Automobile Workers (UAW) union are putting more-than-usual stress on better quality, a situation that has nagged the US auto industry for a long time and is one of the reasons for the sharp increase in sales of foreign-built cars.
"If a foreman tells a worker to 'forget it,' as has sometimes happened in the past, we will expect that worker to make a report. And if plant supervision doesn't 'blow the whistle' on that foreman, the union will," asserts Marc Stepp, director of the UAW's Chrysler department.
"In the past," he adds, "the industry generally has been plagued with recalls , often because of poor design, bad engineering, faulty parts, or unrealistic production quotas.
"We expect management to step up to its responsibility, and so will the work force."
Realistically, however, with the domestic automobile market in total disarray , the chances for success are far less than before the devastating sales downturn of the last few months, despite chairman Lee A. Iacocca's optimistic stance.
The long-beleaguered automaker, fending off bankruptcy for more than a year, has seen its market penetration fall to half of what it was a few years ago.
When the US government and Chrysler began dickering over the disaster-relief funds for the company last fall, both projected the company's share of the market at 9.5 percent. It isn't even that good. In brighter days, the carmaker could count on 15 or 16 percent of the US auto sales pie. In fact, Chrysler Corporation at one time outsold Ford.
Now all domestic car sales have fallen off the charts. US automakers have been squirming over bad sales reports for months while the import dealers smile all the way to the bank. Chrysler has been suffering more than anyone. Car sales for the No. 3 US carmaker were off more than 40 percent in the middle 10 days of June, compared with the same time period a year ago. General Motors was off 35 percent; Ford 25 percent; and American Motors 24 percent.
The prospects for the months ahead aren't much brighter.
Nonetheless, Chrysler finally has gotten its first installment of $500 million in loan guarantees from the US government with a pledge of up to $1 billion more. The money guarantees had been delayed for weeks, with the clock ticking toward disaster, because of the recalcitrance of several banks, both in the US and Europe. By the end of July the company expects to market another $ 300 million in US-backed notes.
Interestingly, Chrysler's loss for this year is projected at $1 billion with some analysts predicting another hefty loss in 1981 as well.
Mr. Iacocca, in contrast, asserts that Chrysler "is in business to stay," and that its operating plan calls for a profitable fourth quarter this year.
Meanwhile, the company is doggedly putting together its new-model plans for ' 81, including, besides the compact Aries and Reliant, a high-luxury Imperial that is designed to vie with the Cadillac Eldorado and Lincoln Continental Mark VI.The Imperial, expected to sell for about $15,000 (a few thousand dollars less than Eldorado and Mark VI), will use a fuel-injected version of the aging 5.2 -liter V-8, plus heavy electronics sophistication.
Clearly, Chrysler will have to convince thousands of potential Imperial buyers, as well as buyers of the rest of its line, that the long-harried carmaker now has a handle on quality control, a nagging problem for Chrysler for a long time.
Chrysler also will have to convince buyers that the gasoline mileage of its high-line Imperial is of less concern than the luxury and appointments of the vehicle itself. Unlike the Seville, in which a good-mileage diesel engine is standard, the Imperial will have to rely on the 5.2-liter gasoline engine alone.
Beyond the Imperial and the K-car Dodge Aries and Plymouth Reliant, the rest of the company's car lines will be little changed for 1981.
Looking ahead, Chrysler has a long list of new products in various stages of development for the mid-and late 1980s, including spinoffs from its K-car chassis, such as a downsized van.
To its advantage, Chrysler will have at least 1 million 4-cylinder engines available for the 1981-model year. A severe shortage of 4-cylinder engines had sharply restrained the output of Omnis and Horizons for the last couple of years. In the 1981-model year, however, Chrysler will have small engines from both Volkswagen and Mitsubishi, Chrysler's Japanese affiliate, as well as its own 2.2-liter power plant built in the United States.
With enough small-size engines, the company should be able to build and power every small car it can sell.
Also, Chrysler has finally sold the last of the cars in its burdensome "sales bank," a system, now scrapped, in which the company built unordered cars and then shipped them to dealers as the orders came in. A year ago the company had a backlog of 110,000 cars, which cost the automaker a satchel of money just to maintain.
Those are two bright spots in a continually clouded outlook for the persistent carmaker.
On the other hand, Chrysler is caught up in a bureaucratic maze as the result of its linkup with federal government funds. The government may be a not-too-silent partner as the No. 3 US carmaker tries to get its wheels turning again.