Eminem Meets Marchionne in Chrysler Redesign of 200 Sedan

Source: Chrysler Group LLC

The 2013 Chrysler 200 sedan. Close

The 2013 Chrysler 200 sedan.

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Source: Chrysler Group LLC

The 2013 Chrysler 200 sedan.

Driving home from work earlier this month, Chrysler dealer David Kelleher was struck by a pang of guilt when he stopped at a red light behind a Dodge Caliber, a compact criticized for stodgy styling and inferior quality before it was killed off last year.

“It was from my store,” said Kelleher, who has two Chrysler Group LLC dealerships in Glen Mills, Pennsylvania. “I almost feel bad that a customer of mine is driving that car, considering the offerings we have now.”

Chrysler has mounted a Lazarus-like comeback on the strength of its Jeeps and Ram pickups. Its car line, long a weakness, has played a smaller role, as Chief Executive Officer Sergio Marchionne face-lifted a few sedans with modest styling tweaks and terminated slow sellers such as the Caliber. That changes early next year with a redesign of the Chrysler 200 family car, a project that may be the company’s most expensive.

“We really start to see the transformation of Chrysler’s car lineup next year,” said Jeff Schuster, an analyst with researcher LMC Automotive of Troy, Michigan. “That’s the big test that’s ahead of them. The industry is looking at the full redesign of the 200 as a way to measure Chrysler’s success.”

Chrysler, which emerged from a U.S.-government backed bankruptcy in 2009, has had 37 months of consecutive sales gains in the U.S. Marchionne has forecast Chrysler will earn $2.2 billion this year and the U.S. automaker is now propping up its Italian savior, Fiat SpA (F), which is losing money as Europe’s car market plunges to its lowest level in two decades.

‘Different Car’

Yet Chrysler cars still sell primarily on price, Kelleher said. The company has yet to field a signature model, such as General Motor Co. (GM)’s Cadillac ATS and Ford Motor Co. (F)’s Fusion, that demonstrates Detroit is building its best sedans in a generation.

“I don’t think anybody wakes up and says, ‘Let’s go out and get an Avenger,’” Kelleher said of a mid-size Dodge he manages to move with a $3,000 rebate. “The new 200 is going to be a different car. People will wake up and come to buy that car.”

Kelleher is among Chrysler dealers who’ve been given a sneak peak at the next generation 200 and he’s eager to get it on his showroom floor. Despite improvements Marchionne made to the current 200 model -- and the fame it gained from being driven by rapper Eminem in a 2011 Super Bowl ad -- it still doesn’t match up well against Ford’s stylish Fusion and Toyota Motor Corp. (7267)’s top-selling Camry sedan, Schuster said.

“I’ve been selling Chryslers since 1992 and, heck, I don’t know if we’ve ever been competitive in that market,” Kelleher said of the mid-sized sedan segment.

Fusion Challenge

Ford’s Fusion, up 25 percent in U.S. sales this year, sent Chrysler back to the drawing board on its 200 redesign, according to Kelleher. Chrysler told its dealers it threw away the design it had planned for the 200 once it saw Ford’s new Fusion, with styling that evokes an Aston Martin luxury car.

“After seeing the Fusion come out, they said, ’OK, we’ve got to crumple this up and go back and do better’,” Kelleher said Chrysler told the dealers. “They were somewhat challenged by the Fusion.”

Chrysler didn’t start over on the 200 after seeing the Fusion, said brand chief Saad Chehab, though he added that Ford’s sedan had an impact, as did the Hyundai Sonata and Kia Optima.

“We react to things we see no matter where they are and the Fusion is one of the stops we made,” Chehab said in an interview. “Our challenge was that if any of us walk into a room and look at the car, is my jaw going to drop?”

Predecessor Pounded

The 200’s predecessor, the Sebring, was the target of withering criticism. Pulitzer-prizing winning car critic Dan Neil, then writing for the Los Angeles Times, called the 2008 Sebring convertible “a veritable chalice of wretchedness, a rattling, thumping, lolling tragedy of a car.”

Marchionne ordered a fast face-lift and a name change for the Sebring shortly after he took control of Chrysler in 2009. That, though, was just a place-holder while Chrysler came up with a more substantial solution for the sedan, Schuster said.

Asked if the new 200 will be Chrysler’s statement car, meant to set the standard for all that will follow, the automaker’s design chief, Ralph Gilles said, “Well, we’ll die trying because you’re right, it’s a very, very critical segment.”

Fiat Fixes

Fixing Chrysler cars was the foundation upon which Fiat gained control of Chrysler out of the Auburn Hills, Michigan-based company’s bankruptcy. Marchionne promised the U.S. government he would use Fiat’s technology in developing cars for Europe to overhaul’s Chrysler’s lackluster lineup.

First, Marchionne improved Chrysler’s car quality, which had historically lagged behind the competition. That remains a work in progress, with the Chrysler brand near the bottom of J.D. Power & Associates Vehicle Dependability Study and the 200 model receiving a below-average rating in reliability from Consumer Reports magazine.

“We had to tackle the issues we’ve had,” Chehab said. “We feel we have made the progress so far and now we have the opportunity to propel into the future with the new 200.”

The new 200 will not be derivative of Chrysler’s big 300 sedan, a styling and sales hit a decade ago that influenced the look of the entire model line, Gilles said.

“The 300 had a lot of gravity to it back in the day and it kind of drove the styling of the minivan and some of the other products,” Gilles, the 300’s designer, said in an interview. “But the 200 is kind of a clean sheet of paper.”

‘Definitively American’

At a Las Vegas meeting to show Chrysler dealers new models last October, the 200 was the only introduction that brought them to their feet, Chehab said.

“The new 200 is a complete home run,” Kelleher said. “It’s got that strength of a very, very expensive European sedan like a Mercedes, but it’s definitively American.”

The initial efforts of the Chrysler-Fiat alliance are beginning to bear fruit, following slow starts. The Dodge Dart compact, based on a Fiat architecture, had its best U.S. sales month in April since it debuted a year ago.

Sales are up 6 percent this year for the Fiat 500, which Marchionne brought to the U.S. in 2011 after a three-decade absence for the Italian car brand. He also is expanding the 500 line by adding three models this year, including an electric version and a stretched 500L model that seats five.

Those small models, which sell more modestly, won’t give Chrysler the car credibility that a well-received 200 would generate, said Michelle Krebs, an analyst for auto researcher Edmunds.com. The current version of the 200 is outsold by more than 2-to-1 by the Camry, Fusion and Honda Motor Co.’s Accord.

“That mid-size car segment is so important,” Krebs said. “It’s huge. You’re not going to make much of a gain if you aren’t playing strongly in that segment. That’s how Toyota and Honda got strong and that’s why Ford is doing so well.”

To contact the reporter on this story: Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net

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

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