October 30, 2007 at 6:47 pm

Chrysler to dump three slow-sellers

Pacifica, PT Cruiser, Magnum expected to get axed as automaker realigns product lineup.

Chrysler's board likely will approve plans to discontinue Chrysler Pacifica, PT Cruiser and Dodge Magnum. (Chrysler)

The board of Chrysler LLC is expected to decide today to kill at least three slow-selling models as part of a sweeping strategic realignment of the newly private automaker.

People close to Chrysler said the board, in its initial meeting under new Chairman and CEO Bob Nardelli, likely will approve plans to discontinue the Chrysler Pacifica crossover, the Dodge Magnum wagon and the PT Cruiser hatchback.

Scaling back products is expected to be the first of several major initiatives at Chrysler as it takes shape under the ownership of private-equity giant Cerberus Capital Management LP.

A Chrysler spokesman declined Monday to confirm the board meeting or its agenda.

But people familiar with the situation said that after three months on the job, Nardelli is ready to put his stamp on Chrysler to make it leaner, quicker and more disciplined.

Nardelli said Monday that Chrysler is now "laser-focused" and committed to making decisions "with a bias toward speed."

"It's either a yes or a no, but not a slow maybe," he said during a question-and-answer session at the American Magazine Conference in Boca Raton, Fla.

Since Cerberus bought Chrysler in August, Nardelli and his top executives have been poring over the product portfolio with an eye toward cutting underperforming or overlapping models.

That effort has accelerated since Chrysler hired veteran Toyota Motor Corp. executive James Press last month as its vice chairman and chief product strategist.

The first models to feel the ax will be the Pacifica, Magnum and PT Cruiser, according to people familiar with the situation.

Sales of all three vehicles have tumbled sharply this year. While Chrysler's overall U.S. sales were down 3 percent through September, Pacifica sales have fallen by 30 percent, Magnum by 32 percent, and the PT Cruiser by 27 percent.

Jeep Commander sales fall

The company also may cut its Jeep Commander full-size SUV. Its sales are down 23 percent this year.

Chrysler spokesman Mike Aberlich declined to comment on any plans by the board to slash products. Industry observers, however, were not surprised to learn that Nardelli is eager to downsize Chrysler's lineup.

"This is a company that obviously needs strong medicine," said Joseph Phillippi of AutoTrends Consulting Inc. in New Jersey. "But the bigger question is, what do you do long-term to fix the portfolio?"

The review of the product plan has been extensive, including critical discussions of the future of the Dodge Dakota compact pickup and the midsize Chrysler Sebring and Dodge Avenger cars.

Nardelli said the company needs to take a dispassionate look at its products with a view to ensuring that they appeal to consumers.

"I'm not a designer, but I'm a consumer," he said. "Rather than deny some of the (negative) reports that are out there you kind of embrace them and say, what do we want to do to take our vehicle from where it is to where consumers want it to be?"

Nardelli pushes change

Nardelli, a longtime General Electric executive and former CEO of Home Depot, is moving to change the culture inside Chrysler at the same time he refocuses the lineup in its showrooms.

One person close to the carmaker said Nardelli is pushing for leaner staffs and faster decisions. Chrysler is in the process of cutting more than 450 white-collar jobs and another 1,000 contract jobs.

Moreover, Nardelli is stressing global growth rather than holding market share in the United States.

On Monday, Chrysler hired L. John Cataldo, a former General Electric executive, to serve in the newly created job of vice president of business development and mergers and acquisitions.

Cataldo will be in charge of "all major business development activities globally, including alliances, partnerships, joint ventures and key multiregion, product-related programs," Chrysler said.

Industry experts see Chrysler as a major player in the international arena by seeking low-cost suppliers and manufacturing partners primarily in Asia.

"Ultimately, Chrysler may be looking to partner up with a foreign automaker to compete with real global players like General Motors and Toyota," said David Cole of the Center for Automotive Research in Ann Arbor.

At the forefront of Chrysler's new direction is Nardelli, whose aggressive leadership style won admirers and detractors alike at General Electric and Home Depot.

People close to the company said Nardelli played a large role in negotiating Chrysler's new four-year agreement with the United Auto Workers. On Monday, he called the contract a "major step forward" in reducing Chrysler's labor-cost gap with Asian rivals.

'Focus on cash'

He has also reached out to mend fences with Chrysler dealers who bore the brunt of overproduction problems last year. "The first thing we had to do is re-establish a partnership rather than an adversarial relationship," he said.

In his appearance Monday, Nardelli reiterated Chrysler's "focus on cash" and said the company is moving to sell off $1 billion in unneeded real estate and facilities. Some of the assets include a vehicle test center in Sterling Heights and a full-size van plant in Windsor.

While Cerberus founder Stephen Feinberg was the architect of the acquisition of Chrysler from Daimler AG, Nardelli said his team in Auburn Hills is firmly in charge of the automaker's operations. "The private-equity guys have entrusted us and delegated to us the day to day operations," he said Monday.

This week, Nardelli is scheduled to make his first visit to Washington, D.C., as Chrysler CEO to discuss fuel economy standards with lawmakers.

You can reach Bill Vlasic at (313) 222-2152 or bvlasic@detnews.com">bvlasic@detnews.com.