Chrysler vows to pay back US by 2014

If you think the new bosses at Chrysler Group are going to whine their way to a future, guess again.

Their bid to turn around the automaker, which nearly closed down entirely this year, is going to be loud, brassy, urgent, maybe a little insane.

And if the plan outlined to reporters and analysts Wednesday works, it will be a miracle on the order of what Lee Iacocca achieved when he turned Chrysler around in the early 1980s.

If it doesn't, it will be a spectacular crash-and-burn.

Chrysler is alive today because the Obama administration pushed it into Chapter 11 bankruptcy and persuaded Italy's Fiat (FIATY) to take control of it.

The plan outlined by Fiat CEO Sergio Marchionne and others envisions a new Chrysler becoming profitable by 2011, then doubling sales and generating $3 billion in annual profit by 2014 -- and paying off the government aid that has enabled the company to stay in business.

The federal government has put up $12.5 billion for Chrysler over the past year and now owns 10% of the company.

The other major owners are a United Auto Workers union health trust, which owns 55% of Chrysler, and Fiat, which owns a 20% stake. That stake could grow to 35% if Fiat managers achieve performance objectives.

The plan was described in a six-hour presentation that featured pictures, lights, Bruce Springsteen (yes, that Bruce Springsteen) and Marchionne, who appeared in trademark black sweater and pants.

The plan calls for Chrysler to produce and sell cars. New cars. Twenty-one new models by 2014.

Two new models will be smaller than anything in the current product line and their engines will be far more efficient, executives said.

While the company projects that 72% of its engines will be six-cylinder and eight-cylinder next year, that proportion is forecast to shrink to 48% within five years.

The plan puts a new focus on Chrysler's Jeep brand, which has been around since before World War II and is a classic American brand. It also has been largely squandered, as analyst John Wolkonowicz of IHS Global Insight told BusinessWeek.

Marchionne and his team at Chrysler want Jeep to be exportable.

So there will be three new Jeep-brand vehicles using passenger-car platforms from Fiat. That means compact and subcompact Jeeps. Chrysler has tried similar ideas without much success before. And the risk, Wolkonowicz said, is that the brand will get watered down.

The plan sees the Chrysler brand getting six new models aimed at an upscale audience.

And contrary to earlier reports, the Dodge brand won't be killed. Rather, the plan includes adding a new compact model, a subcompact hatchback and a midsize plan by 2012 and 2013.

A midsize truck is under consideration for assembly and introduction in 2011.

Chrysler plans to update the interiors, replace the engines and improve the driving for four of its existing vehicles by the fourth quarter of 2010, Ralph Gilles, CEO of the Dodge brand.

The vehicles that will be refreshed by the end of next year are the Avenger sedan, the Journey sport-utility vehicle, the Caravan minivan and the Charger sedan.

Chrysler will begin producing Dodge Caliber compact cars with refreshed interiors at the end of this month.

The Nitro SUV will also be repositioned to be more of a lifestyle vehicle.

The company will phase out the Viper sports car in July next year. But, for you Viper fans (and we know you're out there), Chrysler aims to bring it back with the help of Fiat's expertise in 2012.

There are a number of hurdles Marchionne and his team face, including:

• Surviving the next few years with models that haven't sold particularly well.
• Helping to grow the U.S. auto market from 10 million to 11 million units now to 14.5 million.
• Chrysler has to take market share from its competitors, who are busily trying to come up with  new models of their own.

Oh, and Chrysler plans to improve the overall quality of its vehicles, which have scored poorly in many customer-satisfaction surveys, The Wall Street Journal noted. (Registration may be required.)

"We get it. We are not in denial," said Doug Betts, Chrysler's top quality executive.

Chrysler broke even in September and finished the month with more cash than it had at the end of June, Marchionne said.

The automaker had $5.7 billion at the end of September, up from $4 billion at the end of June, when it exited from bankruptcy protection.

What cheered Tom Walsh, a columnist for the Detroit Free-Press, was the new team's frankness about the problems they inherited and their energy.

At the same time, he noted, Chrysler is "also sending a fragmented, and a little confusing, message about who the company sees as its customers, talking one moment in hipster lingo about finding one's 'inner mojo' and flashing an image of a young woman with a full-arm tattoo on the screen, and then moments later paying homage to John Wayne in breaking out Dodge Ram as a quasi-brand of its own, aimed squarely at good ol’ boys."