Chrysler May Continue Its Discount Plan

AUBURN HILLS, Mich.-- Incoming Chrysler Group Chief Executive Thomas W. LaSorda said Wednesday that the automaker might extend its employee discount plan into September to keep driving sales.

The popular incentive campaign boosted Chrysler’s U.S. sales by 27% in July, as it matched discounts offered by rivals General Motors Corp. and Ford Motor Co.

“The program worked extremely well,” said LaSorda, 51. “We’ll see what happens at the end of the month. We’ll be competitive.”

LaSorda, now Chrysler’s chief operating officer, made his remarks at his first major news conference since being named to replace Dieter Zetsche, who returns to Germany at the end of the year to run parent company DaimlerChrysler.

Chrysler’s chief goal, LaSorda said, “is to keep the momentum going and bring out new products.”

Unlike GM and Ford, which are losing money on their North America auto operations, Chrysler has posted eight consecutive quarters of operating profit in the U.S. And it expects to show a market share gain for the full year, largely because of popular new cars such as the Chrysler 300 and the Dodge Magnum.

The No. 3 U.S. automaker is rolling out at least 10 new Chrysler, Dodge and Jeep models in the coming year. Among them: the just-introduced Jeep Commander SUV, with three rows of seats; the Dodge Charger sport sedan; and the Dodge Ram MegaCab pickup.

Also scheduled for next year is a Dodge Caliber sport wagon, a replacement for the Neon compact.

This product campaign emphasizes passenger cars, rather than the pickups and sport utility vehicles that have made up the bulk of its sales in past years, because that’s where the market is headed because of rising gasoline prices.

Chrysler will also continue development of its diesel-engine passenger vehicles for the U.S., in addition to gas-electric-powered hybrid vehicles as part of a joint development effort with GM. The first Chrysler Group hybrid, a Dodge Durango SUV, is scheduled for late 2007.

“There will be other [hybrid] products following,” LaSorda said.

When Zetsche moves back overseas, there will be little commotion as LaSorda moves across the hall to his boss’ old office at Chrysler Group’s 15-story headquarters in this Detroit suburb.

“The foundations have been very, very well set,” LaSorda said. “You can’t expect to see major changes.”

One potential benefit of the management switch is psychological. The ascension of LaSorda, a Canadian, marks the return of a North American to Chrysler’s helm, and his close ties with Zetsche are likely to mark a new era of cooperation between Germany and Auburn Hills.

A 23-year veteran of GM’s North American and European manufacturing operations, LaSorda was recruited by Zetsche in 2000 to streamline Chrysler’s manufacturing.

At GM, LaSorda was renowned for turning a creaky old East German plant into one of the company’s most efficient auto manufacturing facilities.

Last year’s Harbour Report, a closely watched factory-by-factory measurement of the time it takes to produce vehicles, found that Chrysler’s productivity had increased by 20% under LaSorda.

Cost cutting at Chrysler will continue, LaSorda said, citing as key reasons soaring healthcare costs, incentive wars and budget-busting crude oil and retail gasoline and diesel prices that are bedeviling the U.S. auto industry.

He also vowed to continue Chrysler’s aggressive spending, of about $28 billion over the next five years, on North American factory modernization and development. These modernized factories will feature robotic production lines that reduce the amount of manpower needed to build cars and trucks.

But although he cheerfully admits to being a factory guy at heart, LaSorda bristles at the suggestion that he might not be enough of a product enthusiast to carry on the “American muscle” design theme that’s given Chrysler hits with the Dodge Ram pickup, the Chrysler 300, the Dodge Charger and the Dodge Magnum sport wagon.

“I was down in the studios Monday with [design director] Trevor Creed and I felt like a kid in a toy shop,” he said, promising to continue infusing Chrysler with the “pizazz” that has helped return it to profitability.

On Wednesday, DaimlerChrysler shares fell 49 cents to $50.17.

Times wire services were used in compiling this report.