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Chrysler Reshuffling Begins

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Old 01 Nov 2007, 07:35 pm
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Default Chrysler Reshuffling Begins

Chrysler Reshuffling Begins

It wasn't just jobs that Chrysler LLC cut on Thursday. The automaker knocked out some cars as well.

Chrysler announced that it will stop production of four Dodge and Chrysler models: the Dodge Magnum, Chrysler Pacifica, the Chrysler Crossfire and the PT Cruiser Convertible.

The moves come as the troubled automaker, recently acquired by a private equity firm, is embarking on a major reorganization. Chrysler also said Thursday that it would eliminate some shifts from five of its North American assembly plants and cut 8,500 to 10,000 hourly jobs by 2009.

The cancellation of the four models is the first major product move by Chrysler since James Press, formerly Toyota's top American executive, joined the company in September. Press is now in charge of Chrysler's North American product strategy.

The Dodge Magnum, introduced in 2004, is an aggressively styled station wagon available with the company's powerful Hemi V8 engines. It shares its basic engineering with the Dodge Charger and Chrysler 300 sedans.

The Magnum has been, by far, the slowest-selling of those models. Chrysler will be introducing another model, the Dodge Challenger coupe, on that platform beginning next summer.

In September, Chrysler sold more than 9,000 each of the Dodge Charger and Chrysler 300, but only about 3,600 Magnums.

The Chrysler Pacifica is a crossover SUV with 3 rows of seats and combines elements of SUV and minivan styling. The Pacifica was one of the first crossovers on the market but has struggled to find buyers in an increasingly competitive market.

Through September, Pacifica sales were down 30 percent compared to the first nine months of 2006. Meanwhile, the segment is hot: Sales of midsized crossover vehicles from all manufacturers rose 73 percent, according to the Power Information Network.

The Pacifica's place in Chrysler's product lineup may be filled by the Dodge Journey, a new three-row crossover the company plans to introduce early next year.

Introduced in 2003, the Crossfire, a two-door sports car built in Germany, is based on the engineering platform of the previous-generation Mercedes-Benz SLK. It was seen as an example of synergy when Chrysler was part of DaimlerChrysler Corp.

In August, Daimler, sold off Chrysler to the private equity group Cerberus Capital Management.

By the end of the 2006 model year, so many Crossfires remained on U.S. dealer lots that Chrysler didn't even import any 2007 Crossfires.

Sales numbers aside, the expense of manufacturing the Crossfire in Europe and shipping it the United States was a major factor in deciding to stop production.

The Crossfire was likely only marginally profitable for Chrysler, said Power Information Network analyst Tom Libby.

While canceling the PT Cruiser Convertible, Chrysler bucked earlier media reports that it would stop PT Cruiser production altogether. The company will still make the PT Cruiser hardtop.

Introduced in 2001, the retro-styled PT Cruiser wagon is classified as a crossover. It sales have dropped significantly in recent years, especially as it has faced competition from the very similar Chevrolet HHR introduced in 2006.

Although it is still the fifth-most popular compact crossover in America, just behind the Chevrolet HHR, its sales are down 27 percent so far this year, according to the Power Information Network.

Still, the PT Cruiser remains popular enough, with 2007 sales expected to top 100,000, that it made sense for the company to keep producing it, said Chrysler spokesman Rick Deneau.

The convertible version, which Chrysler is dropping, costs about $4,000 more and represents just 7 percent of PT Cruiser's sales, according to the Power Information Network.

"That thing was just not moving as well as we would have liked," Deneau said of the convertible.

In addition to the Dodge Challenger and Journey, Chrysler will also introduce hybrid versions of its Dodge Durango and Chrysler Aspen large SUVs next year.

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