Recently this blog reported how Honda sales have been thriving due in no small part to the company’s insistence on staying small, that is, focusing on smaller more fuel-efficient vehicles.
That as opposed to producing more sport utility vehicles, trucks and the like…the so-called gas guzzlers.
The decision made Honda look smart as a company as gas prices rocket upward.
Chrysler Tries A Different Approach
On the flip side, the Associated Press reported June 30 that Chrysler plans to close a St. Louis-area factory and drop a shift from another plant due to falling demand for minivans and pickup trucks.
The St. Louis South plant makes minivans and will be closed Oct. 31. With it will go 1,500 jobs, a clear indication that the gas crisis is impacting employment and hence the national economy.
Starting Sept. 2nd Chrysler will also cut one of the two shifts from a nearby plant that builds pickup trucks. That’s another 900 workers with no indication if they will be recalled to work later.
What went wrong?
“We have too much capacity,” Chrysler President and Vice Chairman Tom LaSorda told the AP.
Why The Wait?
But why did Chrysler wait too long?
Many companies, in the automotive industry and otherwise, began shifting gears in early 2007. The similarly slumping housing industry began cutting back workers as early as the end of 2006.
Chrysler will still make minivans, only at its factory in Windsor, Ontario. It would be hard to imagine the automaker dropping minivans entirely, as its Town & Country and Voyager models have served the segment well.
Chrysler Loves Their Pickups
They are aware people will always need trucks for work; and minivans are more fuel-efficient than SUVs for families.
General Motors and Ford also already have announced cutbacks to combat the economic swing. However, their model lines are not as dominated by big, non-fuel efficient cars as Chrysler’s.
Therein lies Chrysler’s challenge. Can they change their ways fast enough to maintain market share during a turbulent time for the auto industry?
Ramming Forward with an Old Standard
Already, despite the recent factory closures, analysts say Chrysler needs to do more. The company’s response?
Let’s hope the new 2009 Ram pickup sells well
Even though full-size pickup sales were down more than 21% through May, Chrysler leaders are hopeful for the new Ram once it arrives in showrooms early this fall.
More than one American automaker believes that, despite a noticeable shift away from sport utility vehicles and pickups, the pickup market will remain in decent shape.
Chrysler is attempting to capture more of that market, picking away at the Ford, Chevrolet and GMC models.
The new Ram will have a more powerful engine, better aerodynamics, and a lighter weight for slightly better fuel efficiency. The interior will be much improved, Chrysler says, with less shiny plastic.
But will a new four-wheel-drive truck with a 5.7-liter Hemi V-8 engine, that gets 14 to 18 miles per gallon from its 390 horsepower, fly today?
Sales of the old Ram do not shed good news. Sales were down 27% through May.
Chrysler executives also said they are working on refreshing the Sebring and Dodge Avenger interiors – so they’re more like the new Ram.
Additionally they are attempting to quell as much noise as possible, and ultimately let them compete better in the market.