Chrysler hopes to build buzz at New York show

Roland Jones • Profile • E-mail

There was a rare piece of good news for Chrysler in February when Dodge teams cleaned up at the Daytona 500. Six of the top eight cars in the biggest stock car race of the season were Dodges, including the Charger driven by winner Ryan Newman.

The Daytona wins are a welcome distraction from the troubles at Chrysler. The automaker was acquired last year by private equity firm Cerberus Capital Management for $7.4 billion, having struggled under the ownership of Germany’s Daimler-Benz since 1998. Cerberus hired Robert Nardelli, the former head of Home Depot, and former Toyota North American President Jim Press to run operations, but despite an initial whiff of optimism about the deal, Chrysler remains in dire straits.

Now Nardelli is set to open the 2008 New York auto show, delivering the keynote speech Wednesday at the last big trade fair of the auto-show season. Consumers will get a chance to see some of the industry’s newest vehicles, and among them will be Dodge’s Challenger SRT8, a reinvention of its iconic muscle car.

“New York’s the world’s media capital, so you have some auto companies that want to put their best foot forward there and make a good impression, and that includes Chrysler,” said Jack Nerad, executive market analyst for Kelley Blue Book, which tracks the automotive industry.

Assuming the old motor racing maxim of “win on Sunday, sell on Monday” is accurate, Dodge’s big win in Florida could help the automaker stem its sales slide. The automaker is No. 4 in terms of U.S. sales behind General Motors, Toyota and Ford.

In the currently depressed automobile market, with some analysts predicting the worst year of sales since 1998, there’s a fierce struggle to win over the hearts and minds of consumers, and the positive publicity generated by the NASCAR win could pull some sorely needed customers into Dodge dealerships.

Video   Ford’s focus March 19: Ford CEO Alan Mulally discusses the automaker’s outlook, saying he sees the economy improving in the latter half of this year. CNBC

The new Challenger, which will be shown in New York, is designed to appeal to baby boomers, a generation that spends some $2 trillion annually and increasingly looks for cars that exude luxury and prestige and remind them of their youth. But the question is whether the new Challenger will have a “halo effect” on Chrysler, driving sales among younger car buyers in their 20s and early 30s, Nerad said.

“The Challenger’s not particularly fuel efficient, but the two ends of the scale where we are seeing growth are in fuel-efficient cars and high-horsepower, limited-production vehicles,” he said, adding that a V6-engined model that’s expected to be shown in New York will broaden the car’s appeal.

Still, Chrysler faces many challenges when it comes to product. Its fleet is one of the industry’s least fuel-efficient, and last month Consumer Reports’ influential issue on cars gave Chrysler very low marks for its vehicles, saying they lack quality.

What’s more, the fortunes of Chrysler’s profitable Dodge Ram pickup are dwindling in the wake of the slumping housing market. Truck sales rely on steady sales among builders, contractors and other small business owners to replace their existing work vehicles.

“The main criticism of Chrysler is its product,” said Jesse Toprak, executive director of industry analysis for Edmunds.com, an automotive Web site. “They don’t have anything that meets the needs of today’s consumer, such as smaller, fuel-efficient vehicles, and their minivans had a lot riding on them, but they aren’t meeting expectations.”

Chrysler, which lost $1.6 billion in 2007, is making drastic moves to regain its focus, trimming its work force and scrapping poorly-performing models. Recently the automaker said it will shut all but its most essential operations worldwide for two weeks in July as part of an attempt to cut costs and preserve cash.

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