Chrysler May Axe Four More Models and Is $1B Short on Revenue

By Brendan Moore

11.30.2007

Business students in St. Mary’s University in Nova Scotia learned a bit about what Wall Street and the automotive press wants to know about Chrysler LLC from Steven Landry of Chrysler; that is, that the company may cut up to another four nameplates soon, and that they’re forecast to spend more than a billion dollars more than they will bring in this year.

Steven Landry, EVP of North American Sales for Chrysler, was at the school to donate $100,000 from Chrysler and spoke to the students as part of the event. Landry graduated from the school in 1982.

This is all according to the Daily News in Halifax, Nova Scotia.

The last time Chrysler said anything about its finances was in May of this year, so this is indeed news.

Regarding the financial data, Landry reportedly told the audience of students, “You have to come to the realization that in some instances, you’ve got to stop spending. You’ve got to right-size what you do to the revenue that comes into the company.”

Regarding the model cuts, the Daily News reported that Landry said Chrysler plans to reduce its nameplate lineup from 28 to about 20.

Now, doing the math, that means four additional nameplates are going away soon since Chrysler just announced that the Chrysler PT Cruiser, the Dodge Magnum, Chrysler Pacifica and Chrysler Crossfire will cease production. That leaves four more on the bubble if Chrysler intends to get down to 20 from 28.

Chrysler LLC immediately cautioned against giving too much weight to Landry’s statements to the students, saying that he was speaking in general terms to a group of students in an informal setting.

Chrysler spokesman Mike Aberlich stated, “He’s not saying we want to be at 20 tomorrow or next year. He’s saying an ideal. When looking at three brands like this, it makes some sense to get to that point, and we are moving in that direction. I know he didn’t specify a timeframe.”

“I wouldn’t be looking for another four announced tomorrow, or next week or next month.”

Backpedaling by the company aside, I’m more inclined to believe that Mr. Landry was being candid in speaking to those students, and that there is a great deal of validity to this statement. In fact, I’m willing to bet that 20 nameplates is the exact number of models they’re aiming for, and Landry just let it slip, that’s all. As to the spokesman’s point that he didn’t mention any timeline, well, it’s worth noting that Chrysler LLC and Cerberus, their owner, have not hesitated in acting once a decision has been made regarding Chrysler’s turnaround efforts.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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4 Comments

  1. The UAW must be feeling a bit misled at this point, eh?

  2. The Jeep Commander, the Jeep Compass, the Chrysler Aspen and the Dodge Nitro. That’s my four.

  3. Here are my four: Durango, Aspen, Commander, and PT Cruiser hardtop. The Durango seems a pretty safe bet to go, since I believe the plant in Newark, DE that makes it and the Aspen is slated to close. The Commander is already rumored to be on its way out the door, and I believe that the regular PT Cruiser is expected to exit stage left in the next 12-18 months as well, since a replacement is supposedly not in the pipeline.

    I’d also like to see the Compass take a hike, personally.

  4. I am SURE there is a defined plan for model cuts, and I’m SURE that the four additional models have already been identified. Chrysler has tried to be so vague, saying only that additional models will be looked at, etc. This guy Landry just slipped up and let the cat out of the big. I bet we see the four models announced in early 2008 at the latest. Chrysler is just trying to parcel out the bad news a little at a time. Who know, maybe this was an intentional slip, trying to gauge reaction, like the thing they did a little while ago when they said they were thinking about cutting dealers and changing the brands focus. I’m thinking 2008 is going to be a rough ride for Chrysler LLC employees and dealers.

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