The New Chrysler II: Lots of Noise, Questions, and Endless Speculation

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The furor surrounding Cerberus’ decision to make Bob Nardelli, formerly of Home Depot and GE, the CEO and chairman of the New Chrysler II, putting Tom LaSorda in the Number 2 position instead of Number 1, is the juiciest gossip train to hit the circuit since Mulally’s appointment at Ford. There has been much more noise than news this week, and here’s our contribution to the fray.

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Employees at Announcement Wanted to be in Air Conditioning or Home by the Pool
Watching both the press conference announcing Bob Nardelli’s appointment as CEO and chairman of the newly formed Chrysler LLC as well as the employee pep rally afterward, and both groups seem wary instead of enthusiastic or supportive. The backlash in the press finds little support for Nardelli. The employees, while impressed with acrobatics and fireworks, generally looked as though they’d have preferred to be in their offices that hot, muggy afternoon. Most left as soon as they sensed the formal program was over. Nardelli says he’s here to bring laser-focus and energy to the turnaround plan already laid out and in progress. His presence in front of employees didn’t bring energy, and returning to finish the last few days of a family vacation the next day didn’t display laser focus.
Nardelli’s been characterized as a drill sergeant with little people skills, and he’s entering a vibrant company full of strong personalities. Being private gives Chrysler LLC the ability to make decisions based on long-term health instead of short-term profit-and-loss statements. But Cerberus expects a quick turnaround and their investors do expect a return. Nardelli may be playing to a different audience, but the pressure will be no less intense.
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Skeptics and Cynics Chewing on Choice of Nardelli
Nardelli and LaSorda put on a good show about working together, and during Q&A Nardelli pulled LaSorda in for assistance with most questions and deferred to him in several instances, often calling him “Tommy.” But for how long can Nardelli and his competitive nature defer to LaSorda’s expertise specific to Chrysler? Cerberus wants one of their guys at the top and doesn’t seem as supportive of LaSorda as they did in May. And changes of ownership nearly always bring changes in management, so why would this be any different? Few on the outside seem to believe that Nardelli has the right stuff for this job, though in these days of skeptics and cynicism that is also no surprise.
Show Me the Beef – What’s the Strategy?
Chrysler needs better overall product strategy, and that is not what Nardelli brings to the table. Nardelli said that he learned at Home Depot that consumers want aspirational products with “forward-looking designs” and good quality. The quality-product-first line is a start, but creating, defining, building, and selling a full car line is more complex than choosing which cabinets, hardware, light switches, tools, or bathroom sinks to stock. Home Depot stocks items designed and built by someone else, and must choose wisely. If Home Depot buyers aren’t happy, most go no further than Lowe’s. If someone doesn’t want a Chrysler 300, there are fourteen other Large Luxury cars available for the 2008MY (including Dodge), not to mention that the buyer is likely also crossing segments. If someone doesn’t want the 300, the Chrysler dealer doesn’t get to send the car back and next month sell Hyundai Azeras instead.

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Chrysler Needs Star-Quality Products – Can Nardelli Deliver?
And Chrysler keeps proving that a good-looking car with some aspirational or emotional connection isn’t enough. They’ve had individual product successes many times over, but more often than not are unable to work the star power into the rest of the range. They need several great products, and these products need to be both related and able to stand in whatever segment/vehicle type they fit in, and the company needs to be able to work that success into the future range better. Interiors are a huge weak point for Chrysler, too. It takes a product conscience to be able to convince the statistical cost-cutters that money in the IP, seats, and center stack can reduce incentives off the hood. It takes a product conscience to be able to defend what the product needs to be, as well as to recognize where costs can be reduced and support those moves. Where is Chrysler LLC’s product conscience? Can Nardelli recognize the RIGHT product for Chrysler versus Dodge or Jeep? There is nothing to indicate he could serve as Lutzian product conscience, and that the person Chrysler LLC needs most.

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