Chrysler’s Strategy

Here is an interview with Dieter Zetsche, who has the unenviable task of turning around Chrysler. His strategy is to differentiate Chrysler products, and become more productive in the factories. Here are his responses to some tough questions on branding.

Q: But you've already announced "aggressive incentives" — to use your own marketing language — on the newest 2004 models. Doesn't that move contradict your strategy to make Chrysler a more premium brand that doesn't sell based on incentives?A: The 2004 models that we introduced early in the year are further through their cycle and carry [higher] incentives to attract the customer. We aren't changing our strategy. Clearly, it's a major challenge to move a brand. You can't do that from one day to the other.

The absolute prerequisite is great products. You can't do it without products, and there's a time lag. We're totally convinced [bringing Chrysler upmarket] is the right direction to take.

Q: Some industry experts warn that Chrysler's core customer isn't a premium car buyer and that you risk alienating the bulk of loyal Chrysler clients if you reposition the brand. Isn't that a valid consideration?A: The Town and Country was a premium product and commanded a premium price. I agree that [such an] endeavor is something that takes years. But I disagree that making Chrysler a premium brand is opposite to the core of the brand image.

Q: If it takes 5-10 years to reposition an automobile brand, such as Audi did, how are you going to improve Chrysler's margins in the meantime?A: First we expect that the products by themselves will be successful. They will give us the volumes and the prices we're shooting for. In 2004 we'll have excellent product and competitive price positioning. It's all about hitting the right spot. We'll be closer to a net pricing situation rather than a huge incentive situation. We're expecting to be able to do that with higher-quality products.

Some of the tactics Chrysler is using do seem to contradict their strategy. If they can pull off a turnaround, there will be some nice business lessons to be learned from it. But it will be tough to make headway and gain market share in an industry that is so competitive.