Model Cuts in Chrysler will Delay Contract Ratification
by EVANDER KLUM
This October, the recently privatized Chrysler LLC plans to cut of some of its models according to one source familiar with the company��s operations. The model cutting program of the automaker is part of its strategies to restore profitability after being sold to Cerberus Capital Management LP last May by the DaimlerChrysler AG. Because Chrysler had just finished negotiating with the United Auto Workers union last week, it is expected that their plan could delay the ratification of the tentative agreement reached after a brief strike.
The ratification of the four-year contract had not been smooth due to disapprovals vocalized by UAW local leaders. For five union leaders, the contract is giving too much favor to the automaker and less for the union represented 49,000 Chrysler workers. Major complaints made by the contract dissidents were from the contract failing to reclassify temporary workers becoming permanent hires and fewer product commitments to Chrysler facilities due to the said vehicle cuts.
"Chrysler's product is so much in flux ... so it's very difficult to provide those guarantees and commitment plant by plant, as GM had done," IRN Inc analyst Erich Merkle said. No response had been made by a spokesperson from Chrysler to the said model cut plan.
Jim Press, Chrysler��s new president and vice chairman said that his company is considering weeding out overlap in similar models and it will be done some time next year. "We have models that overlap where we have two or three vehicles that serve the same market segment, and maybe the same customer, and actually compete with each other to some extent," he said. "You'll see changes as early as next year," Press added.
Analysts expect that the following models are to cut because they compete with another Chrysler vehicle of the same segment: the Jeep Commander rivaling the Grand Cherokee; Chrysler Sebring competing with the Dodge Avenger; the Chrysler Aspen that contends the Dodge Durango and the Dodge Nitro which challenges the Jeep Liberty. Another reason for the elimination of the Dodge Durango is its 30 percent sales reduction this year. Chrysler��s crossover vehicles have proven to be competitive in the segment, not left behind with technologies produced by Japanese and European automakers such as Toyota, Honda, Volkswagen, BMW (makes original BMW 525i parts), Mercedes-Benz and the rest.
"It would be wrong to have the pendulum swing in the other direction, where there is no overlap," Merkle said. "Certainly there will be shared platforms and shared powertrains, but the vehicles can be made to look and feel completely different." A perfect example according to Merkle, is the Chrysler 300 and the Dodge Charger which shares the same platform and powertrains but looks and feel different.
