Turnaround time at Chrysler ... again?

"I think this company still has an advantage over its American competitors in creativity, speed, and the willingness to take risks," says John A. Casesa, a partner of automotive consulting firm Casesa Shapiro.

But each of Chrysler's past turnarounds also came with painful bloodletting. In 1980 and in the early 1990s under Lee Iacocca, and in 2001 through 2003 under Zetsche, Chrysler slashed salaries and cut thousands of jobs to get back to health.

Making sure of success this time won't be easy. Truck profits are tough to come by. Expensive gasoline has undercut sales of SUVs and pickups. Even Chrysler's minivans have been hit by fresher models sold by Toyota and Honda. Its minivan sales are down almost 12 percent this year.

The other big challenge is that the new Chrysler Sebring and Dodge Avenger midsize cars coming out now and early next year replace cars that were also-rans in the hotly contested family sedan market. Even a new Chrysler model will have a tough time breaking into that business, Wolkonowicz says.

Some of Chrysler's new models, such as the Chrysler Aspen large SUV and Dodge Nitro mid-sized SUV are very similar to models sold under other brands by the company.

Chrysler's new models will have to carry a big load. On average, Chrysler's inventory takes 100 days to turn over, about one-third longer than the average car. Even the once-hot Chrysler 300 sedan turns over its dealer inventory every 101 days, according to data compiled by J.D. Power & Associates. Chrysler has been selling more 300's into rental fleets, says Art Spinella, president of CNW Marketing Research in Bandon, Ore. That is a sure sign that retail demand for a car has slipped — it also means less profit because fleet sales are typically discounted.

Only the Caliber and Jeep Compass small crossover SUV, which is almost too new to the market to measure sales success, turn their inventory faster than the average car.

Meanwhile, Chrysler's profitability has been falling since 2004. Last year was Chrysler's best since 1999 when the Germans first bought the company. Chrysler made about $1.9 billion, but about $284 million came from the sale of its Arizona proving ground. Take that out and operating profits were less than in 2004. This year, first-half operating profits are just $217 million, an 80 percent decline versus the first half of 2005.

There are some models that could give the company a boost. LaSorda points out that the new cars come just as consumers shift away from SUVs. The four-door Jeep Wrangler could make a cult hit into something more practical to own. In the fall of 2007, Chrysler will have new Dodge Caravan and Chrysler Town & Country minivans to battle back the share gains made by Honda and Toyota.

For the sake of Detroit, it would be a boon if Chrysler can avoid the kind of job cuts and plant closings that Ford and GM have made. But that's looking tougher to avoid. Still, investors think this might be good news. DaimlerChrysler stock closed up 0.22 percent at 49.29 a share at the close of trading on Tuesday.

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