Fiat's Chrysler Bets On Redesigned Dodge Models to Meet 2011 Sales Target

Chrysler Group LLC, the U.S. automaker operated by Fiat SpA, is introducing six redesigned Dodge models as it seeks to help the company raise domestic sales by as much as 45 percent in 2011.

The improved vehicles, including the Charger sedan and Durango sport-utility vehicle, are “critical” to meeting Auburn Hills, Michigan-based Chrysler’s sales targets, Ralph Gilles, head of the Dodge brand, said yesterday in an interview at a racetrack near San Francisco.

Dodge’s deliveries through October rose 23 percent from a year earlier. About 40 percent of the brand’s third-quarter sales were to corporate, government and rental-car customers, according to TrueCar.com, a Santa Monica, California-based website that studies auto sales. The new models, all of which go on sale this year, may lure more retail buyers, Gilles said.

“We have nameplates that are still romantically powerful,” he said. “If you take those names, take care of them, market them, improve them, they will do well.”

Chrysler’s new Dodge vehicles also include the Avenger sedan, Grand Caravan minivan, Journey SUV and Challenger sports car. The changes range from complete redesigns, such as with the Charger and Durango, to mid-cycle updates, such as modifications to the Journey’s suspension and interior.

Retail Sales

Retail sales will grow because of the new models, and fleet sales are likely to remain flat, Gilles said.

“They’ve got to get the retail back in order,” saidRebecca Lindland, an industry analyst with IHS Automotive. “While fleet can sustain you for some amount of time, it’s not going to be able to be your lifeblood.”

Chrysler expects improving resale values to help generate more leases, Gilles said. Chrysler’s overall leasing rate this year is 11 percent, less than the 21 percent average for the industry, according to Edmunds.com, a Santa Monica, California- based website that tracks automotive pricing.

“We’re going to get back into the leasing business in a big way,” Gilles said. “Our residuals should improve dramatically on every nameplate.”

Retail sales tend to be more profitable than fleet sales. For example, the Los Angeles Department of Water & Power purchased 400 of the 2009 Dodge Avenger SXT sedans last year at an average price of $14,868.69, according to the city-owned power provider. The average transaction price of that model for retail customers was $19,684 a year ago, according to Edmunds.

Previous Owners

Dodge, Chrysler’s volume leader, has suffered in recent years as Chrysler’s previous owners, Cerberus Capital Management LP and DaimlerChrysler AG, cut back on redesigns and upgrades, analysts said.

“A lot of these products have been allowed to get older than they should have,” said George Peterson, president of AutoPacific Inc., a Tustin, California-based industry consultant. “So now they’re playing catch-up.”

Fiat took control of Chrysler as part of the U.S. automaker’s bankruptcy reorganization last year. Sergio Marchionne, chief executive officer of both Chrysler and Fiat, has worked to update Chrysler’s lineup before Fiat-based vehicles are added to the automaker’s portfolio.

The Dodge models are part of 16 new or refreshed vehicles Chrysler is introducing this year. Marchionne seeks to boost U.S. sales to 1.6 million next year from about 1.1 million to 1.2 million this year.

‘Do-or-Die’

“It’s a do-or-die period for Chrysler,” AutoPacific’s Peterson said in a telephone interview. “These are really bridge products that are really necessary to keep them alive and keep them liquid through this time period until they can really get their feet on the ground,” he added.

The new Chrysler vehicles are “a bit late” since automakers typically introduce new models in September and October, and the U.S. winter can be a difficult time to sell cars, Peterson said.

Marchionne made Ram a separate brand for pickups and has said the Dodge brand will have more fuel-efficient entries.

“It’s definitely a brand in transition,” Lindland said in an interview. “They’ve got to start getting people interested in their small cars when they start coming out and educating consumers that they are more than just pickup trucks or a vehicle like the Challenger.”

Chrysler added $2,000 in content to the Dodge Charger, improving its interior, said Marc Seguin, the vehicle’s head of marketing. The vehicle won a positive review from Car and Driver magazine, with a headline in its December edition reading, “Dodge’s careful redesign brings some civility to the Charger.”

The manufacturer’s suggested retail price for the sedan starts at $25,170, excluding an $825 destination charge, the company said.

David Kelleher, who owns David Dodge Chrysler Jeep in Glen Mills, Pennsylvania, said he’s excited for the new vehicles.

“I’ve been selling cars that were tough to sell for quite a few years,” he said. “You give me some cars that can sell, I’m going to do some cool things in my showrooms.”

To contact the reporter on this story: Tim Higgins in San Francisco at thiggins21@bloomberg.net.

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.