The Game Changer: Private Equity Gives You Wings!

I was planning to comment on the Chrysler story a week or two ago, but as other posts took its place I thought “I guess it’s too late”. As time progressed, it seemed like the longer I waited, more and more news kept coming out of Detroit, so, while this post may be a bit late to the party, isn’t that when all the cool people show up anyway?

Much like their winged brethren Aston Martin, Chrysler has recently been taken private by Cerberus Capital Management, New York who paid a mere $7.4 billion for an 80% share of the company (see the story here). The purchase price pales in comparison to the $36 billion Chrysler’s parent company, Daimler, paid in 1998. The merger has been a bit of a dysfunctional relationship from the start, hitting a boiling point when Chrysler posted a $2 billion loss in its Q1 earnings report.

To some degree, this failed merger does not come as a surprise. Chrysler has been almost an afterthought to Daimler, having Chrysler and its two other brands, Dodge and Jeep doing their best to limp by on old technology, tired designs and even more tired marketing.

  • Chrysler’s two “stand out” models, the 300 and the Crossfire (which was axed earlier this year) are both based on out-of-date Benz platforms, the E class and the SLK respectively.
  • Dodge has seen a lack of originality across the brand designs, simply slapping the same cross-hair grille on the front of every single model you make, does give you a “family-look” however, putting a grill from the Ram truck on a Neon replacement, makes for one awkward looking vehicle.
  • Jeep, though having an extremely loyal fan base, refuses to believe that they are ‘just an SUV company’, extending their brand into what are essentially two small cars, the Patriot and the Compass, turning a blind eye to their faithful, and compromising their “Trail Rated” image.

One of the first orders of business is to streamline Chrysler’s offering, ridding the company of models that are under-selling. I think this will mostly affect Chrysler, who’s products are getting a bit “long in the tooth” as they say. The PT Cruiser, for instance, was once the cat’s pajamas when it was introduced some 6 years ago, but has now worn out its welcome, lacking any real type of refresh or re-design, except for a more plastic-y interior “upgrade”. The Chrysler Pacifica and newest SUV, the Aspen, along with the Aspen’s counterpart, the Dodge Durango are also probable goners.

Along with a leaner model line up, Cerberus will begin taking a more critical eye at marketing. To revamp efforts, Cerberus has brought in a new team of marketing advisors, ex-Ford vp-marketing and sales Robert Rewey, ex-Ford vice chairman David Thursfield, former Chrysler COO Wolfgang Bernhard and ex-Chrysler svp of sales and head of dealer relations Gary Dilt, who will all be facing a new sink or swim mentality. As Corbin Rusch, senior brand strategist at Stealing Share said in the BrandWeek Story – “Does Private Equity Impact Brand Equity” ,

“Any time you get private money involved; there is a new level of responsibility that falls on marketing…There is more of a feet-in-the-fire situation in that results are demanded.”

This “feet-in-the-fire” situation was also mentioned in the New York Post (who apparently covered some relevant news before StrAy-Rod) in this article, which also talks a bit about where Chrysler’s marketing is headed, as becoming a private company may give them the ability to experiment a bit more with advertising, “shifting more ad dollars to the web”.

I think going private will ultimately will be a great move for Chrysler, giving them some great potential to “change the game” not only in marketing and advertising, but the entire auto industry. With a streamlined product line, and a more forward thinking agency, Chrysler will have the opportunity to move much quicker than competitors, not only to launch new vehicles, but to embrace all that marketing in the Web 2.0 era has to offer. There is seemingly limitless potential for Chrysler’s 3 brands to build on their long history and show Ford and GM how American auto branding is done.

The company can look at this at this as a clean slate, an opportunity to make Lee Iacocca, and Snoop D-O–Double-G proud of Chrysler once again.

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1 Response to “The Game Changer: Private Equity Gives You Wings!”


  1. 1 Survey Team June 8, 2007 at 8:23 pm

    You seem to agree with some of the Michiganders we surveyed. 33.3% of them thought the sale of Chrysler would improve the company. 39.5% felt it would make no difference. Check it out on our blog at people’s perceptions about Chrysler that Brogan found.


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