Stabilizing Profits for Recession Surviving Auto Dealers

Story first appeared on The Detroit News -

Innovations in retail and outlet upgrades are hot topics for discussion at annual convention

As auto sales have come roaring back from the recession, dealers across the country are seeing profits stabilize and in some cases improve, as many continue to upgrade their buildings and customer waiting areas and amenities.

Many of the nation's 17,540 new car dealers are gathering here this weekend for the annual National Automobile Dealers Association Convention and Expo.

Dealer renovation programs and future innovation will be hot topics among the more than 20,000 dealers, manufacturers and other auto industry officials expected to attend.

"Dealers that are in business today are strong and stable," Terry Burns, executive vice president of the Michigan Automobile Dealers Association, said in an email.

"Many have upgraded their facilities, retooled their service departments, focused on their customer experience and look forward to a great 2013."

In 2012, automakers and their dealers sold about 14.5 million vehicles in the U.S. NADA Chief Economist Paul Taylor expects consumers to buy or lease more than 15.4 million new vehicles this year across the country.

Last year, new-car dealers in Michigan sold 486,372 cars and trucks; that's up 5.6 percent from 460,628 sold in 2011, and up 18.2 percent from 411,342 vehicles sold in 2010. The figures still pale in comparison to what Michigan's dealer body sold in 2007, before the industry collapse and the large reduction of dealerships among the Big Three.

Michigan has about 650 new-car dealers. Burns said he expects a "little contraction" among them this year, due to consolidation of brands.

Nationally, some automakers plan to add new-car dealerships in 2013, including Kia Motors America, which expects to add 10, and Volkswagen Group of America Inc., which plans to add more than 15. In the past year, Chrysler Group LLC's Fiat brand has added about 60 dealerships across the country to grow to 201 locations. Fiat executives have said they would like to add more dealerships in select cities.

Other car companies aren't increasing dealership numbers, but they are helping dealers improve facilities to retain loyal customers and gain new ones.

In a recent interview, Hyundai Motor America President and CEO John Krafcik told NADAFrontPage.com, a website run by the dealer group, that the company does not plan to add to its 820 dealerships. Instead, Krafcik said Hyundai has focused on boosting customer satisfaction; more than 340 dealers have completed renovations.

Automakers from Chrysler to American Honda Motor Co. Inc. and Toyota Motor Sales U.S.A. Inc. have facility upgrade programs. Many of those programs have been in progress for several years.

Volkswagen, which has more than 600 VW dealers and more than 250 Audi dealers, said it plans to complete 45 modernist "White Frame" facilities this year. Some are new construction, others are renovated dealerships. More are in the pipeline for next year. More than 100 Volkswagen dealers are spending $450 million on renovations from 2011 to 2013, while Audi dealers are spending $206 million on renovations from 2009 to 2013.

Doug Fox, owner and president of Ann Arbor Automotive, which includes five Asian brands, renovated his Acura store about seven years ago and his Nissan store five years ago.

"We are in the process of doing an image store for Kia, and we're certainly going to be considering doing one for Hyundai in the next couple of years," he said this week in a phone interview, adding sales at both his Kia and Hyundai franchises each were up about 10 percent in 2012. Fox said he hopes to complete the Kia redesign by the end of the year; Kia will contribute a portion of the cost.

"Certainly, a consumer likes to come into a nice, clean, fresh, contemporary building," Fox said. "And I think in our case, the buildings we're talking about are definitely in need of refurbishment."

More than 70 percent of Ford Motor Co.'s Lincoln Motor Co. dealers in the top 130 U.S. markets have agreed to renovation programs that include creating a "new sales and service experience for future Lincoln owners," Ford spokeswoman Elizabeth Weigandt said in an email.

About 25 percent of dealers in those top markets will have renovated facilities this year, Weigandt said.

General Motors Co. expects almost all Chevrolet, Buick, GMC and Cadillac dealers will have a new look by 2016. The Detroit automaker, which reduced its dealerships over the past year by about 50, said about 92 percent of its 4,355 dealers have agreed to participate in its renovation program.

Russ Shelton's dealership in Rochester Hills is one that has the new look after he spent more than $2 million gutting the facility. He added more square footage to his showroom, new furniture and energy-efficient lighting.

GM is defraying some of the cost, he said.

Shelton, in a phone interview, said he expects sales at Shelton Buick GMC will rise from about 650 to 700 annually to about 1,000 vehicles a year.

"I think 2013 is going to be a good year. All manufacturers are predicting big numbers."

Chrysler Whistle-Blower's Tip Brings U.S. Charges of Global Bribery by Daimler

The Detroit Free Press

WASHINGTON – Nine years ago, Chrysler auditor David Bazzetta was shocked to hear from DaimlerChrysler executives in Germany that the company regularly bribed foreign governments for business – even though they knew it violated U.S. law.

That whistle Bazzetta blew will finally be answered next week, when Daimler appears in a U.S. federal court in Washington on charges it spent hundreds of millions of dollars on payoffs to officials in 22 countries between 1998 and 2008. Several outlets reported that the company will pay $185 million to settle the charges, but the company and the U.S. Department of Justice declined comment.

So too did Bazzetta, 54, of Macomb Township, whose 2004 lawsuit first revealed the secret accounting system Daimler ran to pay off officials from Greece to North Korea, and included kickbacks to Saddam Hussein’s government under the United Nations’ “oil-for-food” program.

According to his lawsuit, Bazzetta, an 18-year veteran of Chrysler, warned about the payments to his boss. When he told Bazzetta to keep quiet, Bazzetta went over his head. When nothing was done, he was transferred, and eventually fired in January 2004, two weeks after his corporate protector retired.

At the time, DaimlerChrysler was trying to recover the aura that surrounded its creation, washed away by Chrysler’s struggles and anger in the United States that the “merger of equals” had given way to a German takeover of Chrysler.

The Justice Department said today that all told, Daimler’s bribes generated at least $50 million in pretax profits.

At the time of its 1997 purchase of Chrysler, Daimler had 200 accounts used for bribes around the world. By 2004, it had winnowed such accounts to 40, but the Justice complaint says the company only eliminated the practice after the launch of probes by U.S. officials.

The kickbacks weren’t just handed over in cash. Daimler paid for tourist trips for Chinese officials, and gave the son of a Chinese government official an internship, a four-month job and help getting him and his girlfriend German student visas.

The company also gave an armored Mercedes sedan worth 267,000 euros to a Liberian government official in 1999, and sent another worth 300,000 euros to a high-ranking official in the Turkmenistan government in 2003, likely late president-for-life Saparmurat Niyazov.

Daimler’s distributor also tried to get in Niyazov’s personal graces by spending $250,000 on translating 10,000 copies of his personal manifesto from Turkmen into German, delivered to Niyazov in a golden box. Daimler eventually sold 879 vehicles in the country from 2000 to 2008.

Bazzetta’s lawsuit sparked a probe in 2004 by U.S. Securities and Exchange Commission officials. The payments fell under the U.S. Foreign Corrupt Practices Act since DaimlerChrysler’s shares were traded in the United States, and several bribes were routed through U.S. bank accounts.

Daimler responded to Bazzetta’s suit in 2004 saying he had been fired because he falsified internal financial information and directed subordinates to do the same. It said Bazzetta's whistleblower claims had no merit because corporate officials were addressing the practice.

The automaker settled the suit out of court in 2005, but later admitted in 2006 that its own investigation had found “improper payments” in Africa, Asia and Eastern Europe, and that several employees had been dismissed.

The government and Daimler are set to appear before a federal judge April 1.

Chrysler Franchise Reborn As Hyundai

from My Desert

Robert Hulett, general manager of the 25-year-old Chrysler dealership that was one of 789 franchises to be shuttered in the Chrysler LLC meltdown across the United States, has reopened with a new fleet of Hyundai cars.

There'll be some familiar faces, too.

“We had about 75 employees at one point, and had to let just about everyone go'' over the summer as used cars were sold and a new franchise opportunity explored, Hulett said.

The city of La Quinta approved a temporary zoning permit for the dealer to operate Dodge City Pre-Owned Auto Sales in the interim. On Oct. 19, the service department reopened and the first fleet of new cars rolled in.

Four people in service and two employees in parts were rehired, Hulett said, along with three sales people and two business associates.

Mayor Don Adolph said it's great that the business was able to launch a new franchise.

“The city and our staff has been working with the dealers that are up there,” he said. “We don't want to end up with one car dealership. You need several of them in there to make this work.

“We're happy this is moving forward,'' he said. “It benefits the city and the dealers that are in the auto center.”

As of Wednesday, some 45 new cars have been prepped and are on the ground.

“The signs are going up now,'' Hulett said, and floor traffic has returned to the franchise.

Within a week, the dealership, owned by Kent B. Sowell, should have 80 new Hyundai vehicles plus 60 used cars on the lot.

“It feels great,” Hulett said as paperwork was being prepared for the dealership's first probable new car sale — a 2009 Elantra Touring vehicle.

“Last year, the auto industry was very challenging. Every day it got worse and worse — hitting rock bottom when Chrysler told us we lost the franchising rights,'' Hulett said. “Now, the economy is starting to show signs of recovery. Hyundai is gaining market share. It's a great product with a great warranty, and it's a company that's growing.

“We feel good about them, and they feel good about us.”

Fiat's Boss Believes He Can Raise Chrysler From The Dead
Story from The Economist

IT IS just as well that high-stakes industrial poker is a game familiar to Sergio Marchionne, the chief executive of Fiat Group. In 2005 he laid the foundations for Fiat’s spectacular recovery by extracting $2 billion from General Motors (GM) as the price for removing a put option that would have forced GM to buy the then-ailing Italian car firm. But even by his standards the next few days will be a daunting test of nerve and stamina from which only two outcomes are possible. Either Mr Marchionne will end up in control of Chrysler, the smallest of Detroit’s Big Three—or he will have quit the table, consigning the sickly carmaker to almost certain bankruptcy. Everything hinges on the negotiations taking place between Mr Marchionne, America’s Treasury, Chrysler’s current management, the unions and secured debt-holders.

Mr Marchionne is confident that a deal can be done that keeps Chrysler out of the bankruptcy courts, but he recognises that a lot can still go wrong. There are signs that the unions, particularly in Canada, where much of Chrysler’s manufacturing capacity is based, feel they have already conceded enough. The senior lenders, which include JPMorgan Chase and Citigroup, are going back and forth with the Treasury over how much of a “haircut” they will have to take on the $6.8 billion they are owed, and whether they will get a compensating equity stake. The Treasury itself will take some convincing to release the $6 billion it has promised in exchange for a credible recovery plan. Although Mr Marchionne has wowed the administration’s auto task-force with his forceful personality and blunt style, officials still fear that even with Fiat’s help, Chrysler may be too far gone to be turned around.

Why does Mr Marchionne believe he can salvage something from a firm that the rest of the industry sees as a basket-case—and which has defied the best efforts first of rich, successful Daimler and later of Cerberus Capital Partners, a sharp-elbowed private-equity group that acquired an 80% stake in Chrysler from the Germans two years ago? Quite simply, because he has done it before. When the Agnellis, Fiat’s dominant shareholder, turned to Mr Marchionne, a corporate troubleshooter who was running another company in which they had an interest, they knew that Fiat’s car business, representing half the group’s turnover, was dying. Poorly led, bleeding cash, heavily indebted and saddled with ancient factories, stroppy unions and outdated products, Fiat had become synonymous with failure at every level.

Italian-born but raised in Canada, where he qualified as both a lawyer and an accountant, Mr Marchionne conforms to none of the caricatures of either country. Instead of sharp suits and elegant circumlocutions, he favours shapeless sweaters and brutal (expletive-laden) frankness; instead of patient consensus-building, he bulldozes his way through, burying corporate politics and flattening dysfunctional hierarchies as he goes.

Mr Marchionne’s approach to Chrysler, if a deal can be done, is likely to be similar to what he did on arrival at Fiat in 2004. “The single most important thing was to dismantle the organisational structure of Fiat,” he recalls. “We tore it apart in 60 days, removing a large number of leaders who had been there a long time and who represented an operating style that lay outside any proper understanding of market dynamics.” In their place Mr Marchionne brought in a younger generation of executives who could respond to his demand for accountability, openness and rapid communication. Two key requirements that everyone had to understand were the need for speed and an end to the crippling political battles that resulted in scarce capital being wasted on little or no standardisation of parts and a ridiculous number of platforms (19 in 2006 will become six by 2012). The time taken to bring new cars from “design freeze” to production was reduced from 26 to 18 months, and a succession of handsome new models followed, capped by the launch in 2007 of the Fiat 500, the cool, retro-styled city car that embodied Fiat’s renaissance.

When a Fiat-Chrysler alliance was first mooted a few months ago, the idea was that in exchange for access to its small-car platforms and fuel-efficient powertrain technology, the Italians would receive a 35% stake in Chrysler. Now, although its initial stake will be scaled back to 20% and cannot reach more than 49% until Chrysler has repaid all the money lent to it by the taxpayer, Fiat will be much more firmly in the driving seat. If the deal is done next week, Mr Marchionne will be named chief executive and a new board of mainly independent directors will be recruited by Fiat and the Treasury.
The need for speed

The model chosen to run Chrysler will be like the one used by Carlos Ghosn when Renault formed its alliance with Nissan. Mr Marchionne will split his time between the two firms, while a hit squad of Fiat managers (some of whom are already crawling over Chrysler) will force through changes and develop synergies between the two organisations. The Italians have been shocked by how bloated Chrysler’s management still is—there are nearly ten times as many people in external communications as there are at Fiat—and the plodding, committee-bound decision-making process. “If this thing comes off”, says a Fiat senior executive, “they’re really in for a shock.”

Yet Mr Marchionne’s confidence that Chrysler can be saved using the same medicine that revived Fiat still does not fully explain why he is willing to risk trying to pull off an unlikely second miracle. Doesn’t he risk damaging his reputation and stretching Fiat’s thin management resources to breaking point? The answer is that he believes the car industry’s crisis will lead to consolidation and that Fiat, for all its recent success, is less than half the size it needs to be to survive in the future. And though he might not be ready to admit it, he has done pretty much all he can with Fiat in its present form—and there is a good deal more excitement and satisfaction in being the hunter rather than the hunted.

Chrysler, Fiat: Back from the Brink?
Story from Business Week

An agreement with big banks may keep Chrysler out of bankruptcy court, but several smaller debt holders remain to be wooed

Italian automaker Fiat (FIA.MI) moved much closer to a deal with Chrysler on Apr. 28 that will blend the two companies' operations and likely keep Chrysler out of bankruptcy court.

The breakthrough came when a committee representing bank and private equity lenders that hold 75% of Chrysler's $6.9 billion in debt agreed with the White House auto industry task force and Chrysler owner Cerberus Capital Partners to take just $2 billion of what it's owed, along with 5% of the company's equity.

The automaker is still not safe from Chapter 11, though. A group of smaller banks that collectively hold 25% of the debt also need to be brought into line. The White House is looking for at least 90% participation by the lending banks before providing more government financing that will keep the automaker out of bankruptcy. Unless the White House extends its deadline, the wooing process needs to conclude by Apr. 30.

One executive working with the debt holders says that smaller banks are complaining that the big banks, who were recipients of Troubled Asset Relief Program (TARP) bailout funds, succumbed to political pressure, striking a weaker deal than what they had been negotiating for.
Better Terms for the UAW?

On Mar. 30, President Obama said his task force concluded that Chrysler could not continue as an independent entity, and that the U.S. Treasury would not extend any more loans to Chrysler past that Apr. 30 deadline unless it struck a deal with another automaker, its unions, and lenders, and showed financial viability.

Debt holders have been complaining that the United Auto Workers were getting much better terms from the White House, and they have been holding out for a better deal. On Sunday, the UAW struck an agreement that gives the union's Voluntary Employee Benefit Assn. (VEBA) health-care trust fund $4.5 billion in Chrysler stock, or about 55% of the fund's total financial backing. A VEBA representative will also hold a seat on Chrysler's board of directors.

A Treasury official indicated that the ongoing negotiations definitely boosted the odds in favor of Chrysler steering clear of bankruptcy court. "The agreement from Chrysler's principal banks is an exceptional accomplishment in line with the President's firm commitment that all stakeholders sacrifice to make this deal succeed," the official said.

While Obama Administration officials have talked tough about forcing both Chrysler and General Motors (GM) into bankruptcy in the last month, there is also a desire to avoid it. "Actual Chapter 11 brings a lot of unknowns for how the consumer will react," says independent marketing consultant Dennis Keene. "Especially now, having hit what we think is the bottom of sales and consumer confidence, Chapter 11 would be a setback for everyone."
Benefits Lost

The UAW has agreed to cuts in wages, overtime pay opportunities, vacation days, and to the elimination of the so-called Jobs Bank, which continued to pay workers after they were terminated. Retirees will also lose their dental and vision insurance coverage. UAW President Ron Gettelfinger couldn't be reached for comment on Apr. 28. But in a letter to members he said, "We fought to maintain our wages, our health care, and our jobs. … In the face of adversity, we secured new product guarantees, and we negotiated new opportunities for UAW involvement in future business decisions."

Part of the agreements call for Fiat to build a small car in the U.S. with union workers. They also specify engines that will be made available to Chrysler and built in the U.S., assuring that some future Chrysler models will continue to be built domestically.

"The UAW is under a great deal of pressure, but the deal they struck was very necessary," said Canadian Auto Workers President Ken Lewenza. The CAW cut a deal with Chrysler last weekend. "The unions have done a great deal to make this deal happen."
Envisioning a New Chrysler

What Chrysler looks like after Fiat begins retooling the company remains to be seen. The Jeep brand is widely considered to be the most valuable asset. Part of the plan calls for Fiat to distribute Jeep models through its European and South American network, which could quickly enhance the company's sales.

The two companies also have been exploring whether they can take some existing Fiat vehicles and rapidly modify them to be sold as Dodges and Chryslers in the U.S.

Of course, all those plans depend on Chrysler, its banks, and the White House crossing the finish line.

Chrysler Set to Fire Staff to Meet Goal

Chrysler LLC is expected to fire roughly 300 salaried employees as soon as Friday in a bid to meet a target of cutting 1,000 white-collar jobs by the end of September.

The auto maker announced the job cuts in July and has offered buyouts and early-retirement packages to entice employees to leave the company. But so far it has not gotten enough people to take the offers to meet its target, the company said in a statement confirming the impending move.

"We're bracing for black Friday," said one Chrysler engineer, who did not want to be named. "The word is we'll get the news tomorrow morning."

In its statement, Chrysler said about three-quarters of the 1,000 jobs have been eliminated through voluntary-severance agreements and that the balance would be achieved through involuntary cuts. The majority of the people who will be fired will be informed on Friday, it said.

News of the impending cuts was reported Thursday by Automotive News.

Chrysler is struggling financially amid a slump in overall auto sales and a sudden shift in consumer tastes to small cars and away from the trucks and sports-utility vehicles that Chrysler, General Motors Corp. and Ford Motor Co. rely on for a large portion of their North American revenue.

In the first eight months of the year, Chrysler's U.S. vehicle sales have fallen 24%, and the declines have accelerated in recent months. In August, Chrysler sales fell 34.5%.

The company, which was acquired a year ago by Cerberus Capital Management LP, has been trying to slash costs to reduce its losses and offset the drop in sales. It has sold or leases some properties, slashed the number of contract workers it employs and idled a few plants and eliminated shifts at others.

Chrysler is also trying to lure union workers to take buy-outs or early retirements at several plants -- the main way it is allowed to eliminate hourly jobs under its current labor contact.

Salaried workers, such as the ranks of engineers, designers and middle managers in its Auburn Hills, Mich., headquarters, can be fired if not enough people agree to severance deals.

With a number of firings looming, morale at Chrysler is "lower than low," another employee said.

Chrysler May Cut Daimler Tie, Seek Alliances

Chrysler LLC's majority owner has approached Daimler AG about taking over the German auto maker's remaining stake in Chrysler. The move is aimed at clearing the way for the U.S. firm to seek closer alliances with other car companies, say people familiar with the matter.

Daimler on Wednesday confirmed it is in talks with private-equity firm Cerberus Capital Management LP, signaling that the final unwinding of one of the business world's most celebrated mergers may be near. Daimler bought Chrysler in 1998 in a $36 billion "merger of equals" that sparked a flurry of automotive tie-ups, many of which proved unsuccessful.

Cerberus acquired 80.1% of Chrysler a year ago. Daimler's remaining 19.9% stake has emerged as a stumbling block for auto makers that could be interested in forming a global alliance with Chrysler, the people familiar with the matter said.

Any alliance would require Chrysler and a partner to exchange confidential information, such as product plans and sales projections, these people said. As a Chrysler shareholder, Daimler would have access to that information, a turnoff for potential partners, they said.

Cerberus may not have to pay Daimler for the stake. Cerberus took control of Chrysler in August 2007 in a complicated transaction in which Daimler essentially gave Chrysler to Cerberus. Cerberus agreed to invest $5 billion in Chrysler's auto operations and $1 billion in its finance arms.

Since then, Chrysler has continued to lose money and Daimler's earnings have been hurt by its share of Chrysler's losses. On Tuesday, Chrysler executives told dealers that the company had lost $400 million so far this year as sales have slid 24% in the first eight months. Daimler has written down most of the value of its Chrysler stake. In July, it valued it at €171 million (about $251 million), down from €1.4 billion a year ago.

It is unclear whether Chrysler has any potential partners prepared to engage in talks. Chrysler and Japan's Nissan Motor Co. have signed deals that call for Chrysler to assemble pickup trucks for Nissan and Nissan to make small cars for Chrysler. Those agreements led to speculation that the two could discuss a deeper partnership involving cross-shareholdings.

Nissan already has such an alliance with France's Renault SA, and Carlos Ghosn, who serves as chief executive of both of those companies and has said he is interested in adding a North American partner. In an interview this summer, Mr. Ghosn said Nissan hasn't had talks with Chrysler about expanding their relationship.

Chrysler confirmed the talks between Cerberus and Daimler but declined to further comment. News of the talks was reported by Manager Magazin, a German business publication.

The merger 10 years ago of what then was Daimler-Benz AG and Chrysler Corp. prompted other auto-industry deals, including General Motors Corp. linking with Fiat SpA, and Ford Motor Co. buying Jaguar and Land Rover -- alliances that were later unwound.

By: Edward Taylor and Neal Boudette
Wall Street Journal; September 25, 2008

Chrysler Seeks Lift From New Dodge Ram Pickup

Auto Maker Hopes to Drive Cash Flow With Key Launch

A year ago, Cerberus Capital Management LP made an about $7 billion bet that it could turn around ailing Chrysler LLC. Now, with the auto maker's sales in a deep slump, Cerberus's best chance for salvaging the bet is riding on a single vehicle: the new Dodge Ram pickup.

The fully redesigned truck, which started arriving in dealerships this month, is Chrysler's biggest selling vehicle and its most profitable model. If the new Ram is a hit, it could lift Chrysler's revenue and move the company much closer to ending its operational losses and generating positive cash flow.

People familiar with the matter said Cerberus has planned on incoming cash to start exceeding its monthly expenses some time in 2009 -- the Ram's first full year in the market.

After a speech here Wednesday, Chrysler Vice Chairman Jim Press acknowledged the new pickup is a key product and its most important launch this year. But he insisted that Chrysler's chance of generating positive cash flow next year isn't "dependent on one model."

Mr. Press declined to predict when Chrysler's cash flow would turn positive. Cerberus has been slashing the Auburn Hills, Mich., auto maker's costs, cutting production and selling assets in hopes of making Chrysler a smaller and profitable company.

The hedge fund and private-equity firm a year ago acquired an 80.1% stake in Chrysler from Germany's Daimler AG in exchange for a promise to invest $5 billion in the auto maker and more than $1 billion in its financing arm.

But it's facing an uphill climb in Chrysler. The auto maker lost about $1.6 billion in 2007, and this year the auto market has steadily worsened. U.S. auto sales are off about 10% so far this year and 2009 is expected to be flat or weaker as housing woes and a sluggish economy sap demand.

Normally the launch of a redesigned Ram would put a charge into Chrysler's sales but the rise in gasoline prices has only complicated matters. In the past few months Americans have steered away from big trucks in favor of small, fuel-efficient cars. Through August, sales of full-size pickups are down 25%. Ram sales are down 29%, to 175,246 from 246,878 in the first eight months of 2007.

That represents a huge hit to the bottom line. Detroit's Big Three generally make about $8,000 in operating profit on each large truck they sell.

Moreover, the Ram will face tough competition. Ford Motor Co. is launching this fall an updated version of its F-150, the top-selling truck in the market.

If the Ram isn't a home run, Chrysler has few other models immediately behind it in the pipeline to drive new sales. It has no major new-product launches in the works for 2009. Those coming in 2010 mainly include larger vehicles that many customers are now shunning: the Jeep Grand Cherokee and Dodge Durango, both sport-utility vehicles, and the Chrysler 300, a large, family sedan.

Chrysler is also supposed to launch a small car made by Nissan Motor Co., and may offer hybrids or electric vehicles developed by auto makers in 2010. But it's unclear whether these vehicles can generate significant volume or profit for Chrysler. Such rebadged models generally sell in limited numbers and have thin margins, said Michael Robinet, an automotive analyst at CSM Worldwide, which tracks and forecasts auto production.

"A lot of vehicles Chrysler has coming are of the large variety, which aren't selling right now," Mr. Robinet said. "I think it's fair to say Chrysler is going to be very challenged in the short term."

CSM forecasts Chrysler will produce only 1.55 million vehicles in 2009, about 500,000 fewer than this year and half as many as in 2005. Even with the new truck in the market, CSM predicts Chrysler's Ram output will fall in 2009 to 245,000 trucks, down from 280,000 this year.

Earlier this year Mr. Press and Chrysler Chief Executive Officer Robert Nardelli said Chrysler aims to sell roughly two million vehicles a year once its turnaround is complete.

Chrysler dealers believe they have a winner in the new Ram. The truck features a more lavish and comfortable interior and a new type of coil suspension that is supposed to give the vehicle a car-like ride. It will be available with "Rambox" compartments in the bed for storing tools and a rear camera to give drivers a view of what's behind when they are backing up.

"I've never been so excited about a new truck," said Steven Wolf, general manager of Helfman Dodge in Houston. "This thing looks bad -- and when I say bad, I mean it's good."

By: Jeff Bennett and Neal Boudette
Wall Street Journal; September 11, 2008