Chrysler Greenlights Challenger. Shows Chrysler is Getting Smart About Niche Cars

Chrysler Corp. this Saturday is expected to announce that it will build the much ballyhooed Challenger muscle car concept car, which made its debut at last January’s North American International Motor Show. The car is expected to go on sale in 2008. Though a muscle car seems slightly out of step with a mounting emphasis in the marketplace for fuel efficient vehicles, the Challenger, say company officials, addresses the demand for vehicles with strong styling statements. The car will be built on Chrysler’s LX platform, which has several shared elements with the company’s Mercedes-Benz sister company, and also underpins the highly successful Chrysler 300, and the Dodge Charger and Dodge Magnum. The addition of the Charger shows, too, how Chrysler has gotten good at building low-cost “top-hats” on one engineering platform. While the company says that it greenlighted the Challenger because of overwhelming positive feedback from the auto show, Chrysler CEO Tom Lasorda said in an interview with me earlier this year that, “There is a lot less risk in doing a Challenger than there used to be.” Contrast the Challenger, for example, to Ford’s Thunderbird. The cost of producing the T-bird was high and it was put into a factory that made its break-even point quite high for a niche car. Lasorda says that Chryler could limit production of the car at a plant that is cranking out 300s and Chargers to maintain demand and eliminate the need to over-produce or incentivize the car. If the car turns out to have a natural market of say, 20,000 a year, low by mass-market standards, Chrysler will still make money. The company could also decide to put a sunset of three years on the car to maintain demand, and still make money. “Overproducing a car that has a niche in the marketplace is the worst thing you can do, Lasorda said earlier this year. GM has decided to build its Camaro, which also debuted at the Detroit show last year. And, of course, Ford continues to do well with its Mustang muscle car. Even with high gas prices ushering in a new crop of econocars, the market still likes its muscle. The Dodge Challenger made its debut in the fall of 1969 as a 1970 model. While it shared emginnering platforms with the Plymouth Barracuda, Dodge Challenger’s wheelbase was two inches longer, creating more interior space. The Dodge Challenger was originally offered as either a two-door hardtop or convertible. The original Challenger was produced only from 1970 to 1974, and maintains status as one of the most desirable “pony” cars of the era.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE