Mindful of how Chrysler did a major turn around in the 1980s, I bought $1000 worth of Chrysler stock Chrysler back in 1990. Threw another grand so so after Desert Storm in '91 (also bought into Microsoft and Planet Hollywood). Although Microsoft has been a steady climber, and I lost just about 90% on Planet Hollywood before I sold it, I the % return on Chrysler since I 1st bought it has been astounding. Between at least 2 stock splits, a buyout and all the other things that's happened, it's been a great ride.

I don't see a ride like that anymore at Chrysler, and infact, I suspect Chrysler won't be up again for years. Here's why.


First and foremost, Chrysler has a track record of groundbreaking design. Whenever they have their backs against the wall, they perform a miracle play, and have been fantastic at doing things no other automaker could pull off. Chrysler design has been so forward thinking, it didn't matter that interior pieces were cheap. People overlooked them. When Chrysler got the new 300C, Magnum, and Charger on the streets, I was estacic because Chrysler did it once again... but this time the cars had quality pieces inside. Chargers, even though they looked spartan, still was light years better in materials than Chrysler has had in memory.

The Dodge Caliber gave me pause. To me it's ugly. But because it's as useful as a Swiss Army knife, and Chrysler couldn't keep the things in stock, they had another winner.

But the other things Chrysler has come out with lately makes me worried.

Now that I've seen the new Sebring, Avenger and new Minivans, seeing how Chrysler overexpanded the Jeep line and how their designs now seem like discarded halfway finished, not quite thought out chisled works, and how they seem to be drifting backwards a little in interior materials, Chrysler design is now behind both Ford and (gasp!) GM!


The other item that makes me consider selling off Chrysler stocks is that Chrysler (more than GM and Ford) still is a truck company that sells cars on the side. It was great when fuel prices were low and you had an entire line of great looking trucks, but to me it seems Chrysler has mucked that up as well.

The Dodge Dakota pickup was the right size truck. It was light, it was sporty, there was a plausable performance image. The Durango looked great. Jeep had focus. The PT Cruiser was new and fresh and had loooong legs in the marketplace. The Ram was distinctive, and was hugely popular.

But....

Chrysler completely destroyed the Dakota. Smaller engine, extended cab only, heavier in weight, slower despite more horses. It has no charm or attraction now. When they were new, I could see myself buying a late 90s Dakota R/T. Today, I wouldn't be caught dead owning the new one.

The new Durango had a downright ugly front end (since improved somewhat) and what resembled a minivan body aft of the A-pillar. Compared to the great looking previous edition, you get the feeling Chrysler was trying to make a big SUV off of a midsize frame, and could only do it by making it tall. Which also made it look disproportionate.

The Jeep Compass is the ultimate watering down (and to me, the ultimate insult) to the Jeep name. I don't feel you needed an MBA in business to understand that the Commander would canibalize Grand Cherokee sales. And what was the point of bringing out both the Compass and the Patriot... both on identical chassis, identical size, same drivetrain. One looks like a mini Liberty, another looks like a......well..... I don't know exactly what it looks like, but aside from the slotted grille and the round headlights, it doesn't look like any Jeep I've ever seen.

The Dodge Ram is offered in more flavors than Baskin Robins, and I'm a huge fan of it's "sports trucks" (Rumble Bee, Daytona, Sports Pack, SRT-10), and wish other makers would get on board. But the down side is that Chrysler has ridden the Rams Kenworth-lookalike front end for about 16 years already. Ford's gone through 2 all new looks since then, and with the GMT900, GM's on it's 3rd. Sure, the Ram's been restyled, it's had at least one all new chassis, and it's interior has gone through more changes than the Saturday Night Live cast. But it's basic look is still the same.


Notice I didn't say anything about Chrysler being sold.

That's because that I don't believe Chrysler will be sold in the conventional way. I believe Daimler will sell off huge amounts of stock to a buyer, but with so much of Chrysler's future vehicles intergrated in with Mercedes, doing without the Daimler side will effectively turn Chrysler into nothing more than a Truck company that also sells Vipers and Calibers.

300s & Chargers (which form the core of Chrysler's car profits), the Challenger (which will generate showroom traffic, and with the demise of the Monte Carlo will be the only large coupe made in America and therefore will own an entire market) and Chrysler's upcoming V6 engine (made in conjunction with Mercedes Benz), Chrysler's transmissions (which are US made versions of Mercedes' trannys), wiring, steering, and a whole host of parts too numerous to mention all come from the Daimler side of DaimlerChrysler. Because of this, & the safeguards DCX is taking on ensuring a buyer doesn't gut the company, I don't believe any sale will be a real sale.

But that doesn't mean I'm not concerned about Chrysler's future.

They have alot of things in the pipeline. But I'm afraid they lost their "Mojo".

I'm also not assured that the LX redesign (which is extremely important) is going to be all that great.

 

I think they are too busy trying to put out new cars and small SUVs every year, that some of the quality and vehicle design doesn't have someone taking a second look and say should we really be doing this?

I know the current 5spd in the HEMI vehicles is a Diamler tranny, but I'm pretty sure the new RE68 tranny and 6spd transaxle are Chrysler designs and parts. I don't know for sure, so I could be wrong on that.

 

If the new Seabring would of kept the sema hood with the vents, instead of the ones with the lines. Well those lines look retarded...Caliber looks pretty dumb. The Avenger has potential to look better if htey would of spend 5 more minutes in the design studio. Jeep compass doesn't look right either.
I'd say their problem is designing a competend looking car.
Alot of them look retarded.

But they do have some cool SRT stuff. Only if they sell it for a way cheaper...

BTW, Guionm. I know this doesn't make alot of sense. But is it possible for the dodge/chrysler side to be heavily downsized and certain resources sold off along with the Plymouth name?

 

I would say it's a pretty good time to sell. All the hype and speculation has the stock at a 7 year high. However, the low-mid 80's seem to be the ceiling for now. I think the only way it goes higher is if DCX were to actually sell Chrysler. I don't see that happening. I could go into why, but then this post would be 10 miles long.

Also when the street finally realizes DCX isn't going to sell, you're going to get a sharp drop in stock price. I would take the massive gift the last 2 months has amounted to (up about 32%) and run with it. It's almost too much of a good thing not to. Just don't forget about the chunk capital gains tax will take from you when April 15, 2008 rolls around.

Of course the other side is you could wait a few weeks to see if some more speculative stories, which could very well pop up, might push the stock into the high 80's-low 90's. If it doesn't happen, you might find yourself chasing it all the way down to the 70's before you cut bait.

If you do sell, you might also check out Force Protection Inc. (FRPT) as a reinvestment. If you spend an hour reading the 10k and news about them and you'll see loads of potential. This company makes the armored vehicles with the V shaped hulls that eat IEDs and RPG's for lunch. Their earnings are way up and they have lots of gov't contracts keeping them busy. A massive gov't contract for the kinds of vehicles FRPT makes will be awarded in a few weeks. FRPT will definitely get some of it, perhaps quite a large portion of it. So earnings should be looking quite good for at least the next year. It's also possible they could get an even larger chunk of business from the DoD when they look to replace the Humvee in a year or so.
Anyhow, check out the 10K. You'll be drooling.

 

Interesting thoughts as usual, Guy. Chrysler's current interior oversights remind me of the issues that Mercedes was having in the late 90's. I remember the press ripping on the lack of attention on the interiors of the ML320 and E-class.

 

You know I actually disagree with most of this. The Avenger, in RT trim at least, looks pretty decent. Should it look less like the Charger? Of course, but overall it doesn't look terrible. The Sebring doesn't look bad until you see the C pillar and rear end. The interior and front end IMO lok pretty darn nice. The Caliber is a BIG hit in my book. Rough and rugged looks yet small and car like size. Even my wife likes it, and she has a hard time distinguishing b/t cars if they are different colors than ones she has seen.

I do agree w/ Guy about the over expansion of Jeep. The Wrangler, Grand Cherokee, and a Gladiator would make a well rounded showroom with lots of potential.

 

Well, lots of the people who produced those great designs are all retired or fired. Chrysler had a charming way of turning lemons into lemonade. Hell, they managed to polish the Neon enough to get it a cult following (SRT-8).

 

SRT-4. Though a Neon w/ a 6.1 Hemi would be Hella sweet!

 

I don't think you know what I was refering to.
This minor change makes a ton of difference.

This hood [and grill exchange] is no where near as good.

 

That car is the Sebring they did for SEMA 2006. It wasn't ever part of the production model design. That said I totally agree with you. That set up would go a long in making it a better car.

 

Oh, sorry. The reason I called it the old hood is because I saw this car/hood before I saw the one with the lines. I'll edit my message.

 

Id sell. What card do they have left to play? Unless you know of some killer economy car or technology comming down the pipe. Mercedes cant give them away. Kerkokian or whatever his name is is offering pennies on the dollar. GM is only offering stock for the deal, not money. Main Street is a bust. Also it shows that Mercedes may be cutting their losses and not investing in fixing the company anymore. Too shaky for me. Just my take. Then again, I cant believe you made money on them...


Oh yeah. A gain isnt a gain until you take it off the table!

 

I agree strongly that Chrysler has way too many overlapping and boring (and cheap-looking) products, especially SUV/CUVs.

But still, I would say that their problems are only 20% product, 80% systematic. The long-term question is if their US manufacturing and dealer network is worth anything to anyone. Quite possibly if they get assimilated into Renaut-Nissan or something, they might have a good return eventually, but as an independent corp my gut feeling is that they are worthless.

 

I actually remember that car but I always assumed that look would be for a SRT version. The grill bears quite a resemblence to the 300 SRT-8, so I never assumed it would be the production model. The slated hood on the regular Sebring and Crossfire IMO add a classic touch to the lineup. While being distinctive it also shows a trend that hasn't been around in decades and I for one appreciate that.

Minor changes can make huge strides to chance appearances. Take the S-10 and S-10 Xtreme, along w/ the Colorado Xtreme, as prime examples. Or the Z24 Cavalier vs the black bumper base models.

 

I'll give you a big 10-4 on that call good buddy.

In particular, I have been disheartened by two things...

1) DCX has over-extended the Jeep SUV lineup in a way that I have never seen before. I thought Ford overdid it with the Escape, Explorer, Expedition, and Excursion - but sheesh, Jeep has gone completely bonkers with "box" designs lately. At least... Ford recognized they were too spread-out and dropped the Excursion, AND there were some visual differences between the Escape, Explorer, and Expedition.

2) Despite the ravenous success of the "Hemi" name thrown on an engine that is anything but a true "hemi", DCX has had to resort to literally giving away the engine option that was fetching them several thousand dollars per car as an option just months earlier. Not only is that a sign of desperation to move engines (sitting in a warehouse) and cars (sitting in storage lots), but it also undermines the future marketing potential of the engine and name IMO. It's like we discussed with the use of "SS" or "GT" on any old thing, or using the employee discount for everyone, or radically high rebates/incentives. They all serve to "cheapen" the image of an otherwise prestigious marque.

As for new designs and trends, I think DCX is doing their own thing - and that's not really all bad, but I personally am not flung into a hormone frenzy by what I am seeing as their mainstream vehicles in the last 2 years.

Remember, you are not killing someone because you sold some stock in their company. I think it's a good time, but it's YOUR decision and you know what you want your money to do for you better than anyone.

Good luck either way!