Nardelli's Coup

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There’s no telling what new Chrysler Chairman and CEO Robert Nardelli will do to transform the troubled car company in the coming months. But I think it’s fair to say that no matter what he does from here on out, bringing in a heavy hitter like Jim Press—and stealing him from Toyota, no less—will stand as one of his most important moves. This hire shows that his turnaround job won’t be just another rounds of cost cuts that ushers in a few short years of profits, only to end up in the same position a few years later. Detroit’s carmakers have a tendency to drag themselves into the black after a crisis, but without finding a way to connect with consumers or fixing their profligate spending on discounts. They lose money, cut their way to profitability, lose more market share and end up in the red later. Chrysler seems to find itself near death every five to 10 years. As the top executive for Toyota Motor Sales, Press presided over torrid growth. He also played a key role in building a brand that is both beloved by consumers and respected by competitors. Toyota managed to build factory after factory without overproducing cars. The company has avoided the dangerous treadmill of discounting that currently has Detroit’s carmakers in trouble. And he played a big part in Toyota’s product planning for North America, which always managed to read the consumer trends and find out what car buyers wanted ahead of most competitors. Getting in early on hybrid-electric cars, crossover suvs and rear-wheel drive luxury cars are three quick examples.

Now let’s look at Chrysler’s problems. Consumers want smaller, leaner crossover suvs. Chrysler came late to the party. Hybrids? Late again, though coming soon. Its sales and marketing strategy? Chrysler has only recently come to the realization that overbuilding cars and foisting them off on its dealers, rental agencies and the public is the wrong way to go. It depletes profits and gives brands a reputation as being a bargain center. Press has a big task ahead of him when it comes to fixing those problems. But he clearly knows how to reach out to consumers, work with car dealers and build brands in ways that Chrysler was unable to do. In short, hiring Jim Press is a huge coup for Nardelli and proof to anyone that he is dead serious about fixing Chrysler once and for all.

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