Concerns about Chrysler as auto show begins

However, perhaps the most pressing issue for Chrysler is sales of its minivans, which has been a bread-and-butter product for the automaker since their introduction in the early 1980s. In recent years the segment has been shrinking, and Honda is now vying for dominance. The Dodge Caravan barely clung to its lead in the segment in 2007, selling 176,000 units compared with the Honda Odyssey’s 173,000, according to Global Insight data.

“It’s a worrying situation because right now the minivan is a one-note song for Chrysler,” Bragman said. “They will not turn the company around on minivan sales alone; you need a whole line of strong-selling vehicles, and that’s especially going to be the case in 2008 because it’s going to be a challenging market, at least for the start of the year.”

Global Insight expects U.S. vehicle sales to total 15.5 million in 2008, down from 16.1 million in 2007, a decline of 3 percent that would make it the worst year in a decade.

Competition is also heating up in the pickup truck segment. Chrysler will show its new Dodge Ram truck at the Detroit show, while Ford will unveil the latest version of the F-150 pickup, long the nation’s best-selling vehicle. And last year Toyota started selling its redesigned Tundra truck, which is designed to compete squarely with the Ram, the F-150 and Chevrolet’s Silverado pickup.

The continuing impact of the housing slump means sales of these highly profitable vehicles are likely to slide. Pickup sales rely on steady sales among home builders, contractors and other small business owners to replace their existing work vehicles.

“Full-size pickups are very important for the Big Three,” said Kelley Blue Book’s Nerad. “Chrysler was the perennial No. 3 in pickup sales, but they came through with new styling [for the Dodge Ram] a few years ago and kick-started their sales, and I’m sure they’d like to repeat that performance,” he said. “So you can expect the new Ram to be bold — that’s what they’re all about.”

However, it’s not all doom and gloom at Chrysler. Its redesigned Jeep Wrangler saw sales almost double in 2007, even as sales of models like the Jeep Compass, the Dodge Caliber and Chrysler 300 slipped. Wrangler sales have soared without having to rely on sales incentives.

Another bright spot is the corporate structure at Chrysler, Bragman said. Under its new  ownership the automaker has moved swiftly to cancel underperforming models, such as the Magnum, the Crossfire, the PT Cruiser convertible and the Pacifica, he said.

“From what we can tell they’re aware of their problems and they’re working hard to make changes in product lines,” he said. “And that’s the nice thing about private equity — the decision-making processes are quick, and you only need a handful of executives to change things and not a committee — that’s a new thing when it comes to how an automaker is run, and it’s an encouraging sign for Chrysler.”

Don't miss this on MSNBC.com Pass it on: Sons of infertile men may be next The eight biggest Olympic marketing debacles Reality show judges range from wise to wacko Cosmic Log: Is this your jetpack? Forget your inhibitions: World's sexiest islands

MORE FROM DETROIT AUTO SHOW 2008

Detroit auto show 2008 Section Front

GM looking for a jolt from electric power Ford to make gas caps a thing of the past Overriding theme of auto show? There isn’t one Honda’s deliberate path drives sales growth Ford's Explorer, back from the dead Newsweek: Is green Detroit forgoing safety? Big Three CEOs cautious on industry outlook Automakers get green but stay mean Chrysler, Ford make patriotic sales pitch Car shoppers to benefit from pickup war Detroit auto show 2008 Section Front   Add Detroit auto show 2008 headlines to your news reader: