Bernhard Back At Chrysler. What Does He Know That Daimler Didn't?

Not surprisingly, Wolfgang Bernhard, former COO of Chrysler, will be taking the reins as chairman of the new Chrysler Corp. for new majority-owner Cerberus Capital Management after the deal to buy the automaker is completed.

Bernhard, who had an unhappy experience at Volkswagen last year and fell victim to VW’s long-running management suite drama, had been advising Cerberus, which will hold about 80% of Chrysler. Bernhard, before going to VW in 2005, was to have been the head of Mercedes-Benz, his first true love. But he ran afoul of politics there, too, and was sent packing.

Spend any time with Bernhard and you get the idea he is a really solid car man. He seems to spring from that same pod that produced talents like Bob Lutz of GM and Wolfgang Reitzle, the former product boss at BMW who now runs Linde AG. They are executives with great eyes and instincts and personalities that fill up a room. They also have tremendous capacities to make enemies in the executive suite.

I recall doing a story about the future of Jeep when Bernhard was still at Chrysler. He walked me around the models Chrysler had inside its design studios. The understanding of the iconic American brand by this German executive who had been in the U.S. only three years at that point was uncanny. He went over every inch of what would become the new Wrangler, the new Liberty and the new Grand Cherokee, as well as the Patriot and Compass.

For all Bernhard’s talent and charisma, though, his report card is a bit mixed. The Compass seems very much besides the point in the Jeep showroom. The Grand Cherokee didn’t show enough newness in the design. The Wrangler has been spot on. The Jeep Commander has been a bust. The Chrysler Crossfire, a Bernhard project to see how well Chrysler and Mercedes could get along on products, has also been a bust. To be fair, the Chrysler 300 was a moon-shot design produced under Bernhard’s eye, and helps to offset some of the other product failures.

It’s important to realize that while Daimler is selling off most of Chrysler, it is keeping 20%. It’s like those couples you hear about who separate but continue to live under the same roof because it’s cheaper. Bernhard, with close ties to Daimler, and better relations than most of the Chrysler execs despite his ouster in 2004, will be instrumental in maintaining harmony between the two companies and finding ways for the two sides to help one another in future. Now that Mercedes-Benz is well on its way to being fixed, the Germans wanted Chrysler off its books, but it not going all the way out of its life.

Bernhard is going to have to work on a strategy with Cerberus to get some competitive profit margins out of Chrysler. There is no more strategy at work here to balance the mass market Chrysler with the premium/luxe Mercedes. Chrysler is on its own. And the brand equities with Chrysler, Dodge and Jeep are dismal. Sure the 300C has been a huge success. But the research shows that a shocking number of people don’t even associate it with Chrysler. It’s like the same problem Mazda long had with the Miata. The product is bigger than the brand.

Chrysler CEO Tom Lasorda, handpicked by DaimlerChsysler CEO Dieter Zetsche to succeed him in the U.S. after Zetsche ran Chrysler, appears to also be Cerberus’s choice to take the company forward. Lasorda knows what its like to have Bernhard as his boss. And maybe the two will figure out how to make the new Chrysler fly. But it is not yet evident what those guys know that Daimler-Benz couldn’t figure out in terms of what will make a profitable Chrysler.

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