Daimler Chrysler Seeks a New Image

DAIMLER CHRYSLER SEEKS A NEW IMAGE

"I'd trade in my Corvette convertible in a minute to buy this car", exclaimed

an excited observer at an advance showing of the then Chrysler Motors Corporation's

(now Daimler Chrysler, www.daimerchrysler.com) design ideas for the 1990s. Since battling back from the brink of bankruptcy in the late 1970s, Chrysler continued to run a distant third to GM and Ford in the American automobile market, and even that position was challenged by Honda in 1990 (see Table 1). Chrysler dramatically rebounded in the early 1980s and gained almost two percentage points over the first five years of the 1980s by adding more economical, middle-class cars to its line of luxury sedans. However, increased competition from Japanese imports, poor product quality, and unimaginative design led to falling market share in the latter half of the decade.

Chrysler did, however, succeed with its minivan. Because of their triumph with the minivan, Chrysler was even more determined to succeed in the car market, so engineers and managers tried to design automobiles that fit the stylish, high-quality image Chrysler needed. Chrysler continued to maintain its business strategy of focusing on profit instead o market share, avoiding global alliances, and thriving on a shortage of capital. In 1989, Chrysler held an advance showing of concept cars for the 1990s that included a V-10 engine for both trucks and cars. Two stylish, yet pragmatic concepts were released, including the Chrysler Millennium and the tiny Plymouth Speedster. Both cars featured eye-catching design but failed to deliver performance because underneath they were based on the traditional Chrysler platform and power train. The reviewers, however, did take note of the rear-drive two-seat sports car, made available in 1992, which incorporated the V-10 engine. Code- named the Dodge TBD (To Be Determined) and later named the Dodge Viper, it looked like a Chevrolet Corvette - but carried a price tag of $55,000. Since the introduction of the Viper (www.dodge.com/viper), Chrysler raised the starting price several times. At the beginning of 2002, Chrysler added a four-figure price hike bringing the price to a starting value of $75,500 for the RT/10 Roadster model and $76,000 for the GTS Coupe model. The Viper was positioned to restore Chrysler's reputation for designing exciting cars.

TABLE 1

U.S. Automobile Market Shares (%)

YEAR CHRYSLER FORD G.M. HONDA OTHER

1980 10.7 16.6 46.8 4.3 21.6

1985 12.5 18.8 42.5 5.0 21.2

1990 9.3 23.9 35.5 9.4 21.9

1993 15.0 26.0 34.0 5.0 20.0

1996 15.9 25.1 32.1 5.5 21.4

2001 12.8 27.1 28.5 7.0 24.6

Even though some call the Dodge Viper the "sexiest yet silliest" car around, it appears that the introduction of the Dodge Viper was a success. Recently, Chrysler Corporation President John Lutz stated that the company will keep Viper production lower than the number of Vipers that are demanded, estimated as approximately 2000 cars per year. Chrysler also revealed that it would offer the Viper in two new colours, emerald green and yellow. Previously, the first 250 cars were red, and the rest were painted black. Improvements are also planned for the interior of the Viper. Chrysler also introduced a coupe version of the Viper, the Viper GTS, which featured a roof instead of a soft convertible top. In April 2002, Dodge planned to end the production of the GTS coupe with a limited Final Edition production run. The Final Edition GTS will be painted an eye - catching red and have white racing stripes. It will feature other unique touches such as a black leather steering wheel and shift knob embellished with red stitching. Only 360 of the Final Edition GTS models will be produced. In May 2002, Dodge planned to begin production on the 2003 Dodge Viper SRT-10, which will be available exclusively in convertible form.

For continued success the Viper must attract the yuppie crowd - the highly educated, affluent baby boomers- that tend to prefer imported vehicles. Because this group would be the prime target group for such a high-performance car, Chrysler needed to ensure that it could complete in a market traditionally dominated by Corvette, Mazda Miata, Porsche Boxster, Porsche 911/96, and Mitsubishi 3000 GT. Primary concerns for Chrysler were overcoming its boxcar image with this group, determining if they should offer incentives on the Dodge Viper, the importance of styling and prestige when promoting to this market, and how to exploit its merger with Daimler -Benz to the advantage of Viper.

To address these concerns, 30 statements were constructed to measure attitudes towards these factors and to classify the respondents. The respondents used a nine-point Likert scale (1 = definitely disagree, 9 = definitely agree). The respondents were obtained from the mailing lists of Car and Driver, Business Week, and Inc. magazines and they were telephoned at their homes by an independent surveying company. The statements used in the survey of 400 respondents are listed below :