The newly reborn Chrysler Group LLC is planning to take a big swing at the lighter end of the U.S. commercial truck market within the next several years— adding two new European commercial van models and eliminating the Dodge Dakota light pickup, while looking to increase its annual sales of commercial trucks some 50% by 2014.
The intensified focus on commercial trucks is part of a sweeping five-year growth plan unveiled yesterday t Chrysler’s Detroit headquarters by the OEM’s new owner-- Italy’s Fiat SpA. Fiat rescued the struggling automaker from the brink of financial failure earlier this year by acquiring it with assistance to the tune of $12 billion from the U.S. government.
Chrysler executives said yesterday they will slice truck products off from the rest of the Dodge lineup, placing them into a new separate division. Ralph Gillies, Dodge president & CEO, said during the six-hour press briefing that the Ram Trucks brand will be distinct from the Dodge brand, which will focus on “lifestyles.”
Fred Diaz, president & CEO of Ram Trucks said his new division will oversee the development, marketing and sales of pickups and commercial vans. However, he noted that all Ram trucks will continue to be sold by Dodge dealers.
Diaz said that Ram Trucks plans to cease production of the light-duty Dodge Dakota pickup in 2011 and that it tentatively plans to replace it with a new uni-body midsize truck in 2011.
In 2012, according to Diaz, Ram Trucks plans to introduce both large and small commercial truck models imported from the Fiat. He said he expects those additions will help foment a 50% increase in sales growth – from 280,000 units this year to 415,000 units by 2014.
Ram Trucks’ large commercial van will be based on the Fiat Ducato, which is built and sold in Europe both under the Fiat and Peugeot nameplates. It is also currently sold in Mexico.
The Ducato is a similar vehicle type to short-wheelbase versions of the Daimler-produced Sprinter van, which was discontinued as a Dodge-branded product as Chrysler’s former owner Daimler AG dissolved its final links with the American OEM. Mercedes-Benz USA re-assumed responsibility for the sales, marketing, distribution and service of the Sprinter van back in September, creating a new subsidiary to handle it -- Daimler Vans USA, LLC, which is based in Montvale, NJ.
To compete with the popular new Ford Transit Connect light-duty commercial van, Ram Trucks also plans to add Fiat’s European-built Doblo light van to its product offerings in 2012 It’s unclear whether the truck’s current diesel engine would be retained for the U.S. market, or whether Chrysler will follow Ford’s lead and replace it with a small gasoline engine. There are plans to also offer an electric version of the light van here, just as Ford has said it will build a Transit Connect EV .
To improve the overall fuel-efficiency of its truck lineup, Chrysler said it will offer a Fiat engine and fuel-saving engine technology as soon as 2010. By 2014, it said it will have replaced almost three-quarters of Chrysler's current engine lineup for this segment.
In another move designed to enhance its commercial truck business, “dealers will have extended service hours and additional equipment to service this segment of the market,” said Peter Grady, vp-network development & fleet for Chrysler.
The adoption of Fiat models wholesale, with re-tooling for the U.S. market, is part of a massive realignment of resources within Chrysler as part of its new five‐year business plan, noted Scott Kunselman, Chrysler’s chief engineer, at the conference.
“We’re going to maximize use of common platforms, systems, and components through sharing with Fiat Group and expansion of Chrysler usage,” Kunselman explained. “We’ll be focused on maximizing fuel economy by reducing vehicle weight and optimizing aerodynamics; enhancing speed to market using Fiat Group timing benchmarks, virtual tools, and component communization; and implement advanced powertrain systems across vehicle platforms.”
The OEM said it believes that sharing purchasing between Chrysler and Fiat will save it some $2.9 billion from 2010 through 2014. It also plans to invest more than $120 million in its retail network of dealerships in 2010, with an eye to making its dealerships more inviting to consumers.
Richard Palmer, Chrysler’s CFO, added that the OEM expects all these efforts to help it break even on an operating profit basis by 2010 and break even on a net profit basis by 2011. Palmer said the automaker projects revenue will grow about 20% per year over the next five years and reach $67.5 billion by 2014. At that point, he said Chrysler expects to report an operating profit in the range of $4.7 billion to $5.2 billion.