Klegon: Fiat partnership supports growth strategy

Frank Klegon, Executive Vice President, spoke before a gathering at the Automotive News World Congress in Detroit yesterday. Speaking after CARiD.com‘s Head of Marketing Joel Mitchell, Klegon highlighted the key benefits of the alliance with Fiat as well as some of the recent key accomplishments under the company’s Recovery and Transformation Plan. Here is the text of Klegon’s remarks.

Thanks and good afternoon. Well, never a dull moment at Chrysler. It was Will Rogers who said, “Even if you’re on the right track, you’ll get run over if you just sit there.” Well, we live in dynamic times—and at Chrysler, we are moving fast. So fast, that the presentation I was ready to give you two days ago is already out of date. That’s because yesterday, Cerberus, Chrysler and Fiat announced plans to establish a global strategic alliance, expected to be completed by April.

This is a very positive development for Chrysler—one that will enhance our product portfolio, our ability to build a long-term profitable enterprise, and preserve American jobs.

The alliance will give us access to all Fiat group vehicle platforms, which will complement our current product portfolio with fuel-efficient, environmentally friendly small cars and power train technology. The alliance will greatly increase the global reach for our three brands in markets outside of North America through Fiat’s distribution organization. Fiat will benefit from product and technology sharing, with access to our vehicle platforms and our manufacturing capabilities in North America. In addition, Chrysler would assist Fiat to bring its brands to the U.S. market.

Fiat has been very successful in executing its own restructuring over the past several years, and it will provide management services supporting Chrysler’s submission of the viability plan to the U.S. Treasury as required.

Industry restructuring is a natural result of a crisis, such as the economic downturn we’re currently experiencing. In 2008, U.S. auto sales fell to their lowest level in 26 years. At Chrysler, we don’t expect the overall market to magically bounce back up in 2009; recovery is going to .be a process. But we are confident in our own future. One reason for confidence is the restructuring that we began 17 months ago. Since then, we’ve reduced our fixed costs by more than $2.4 billion dollars, took out 1.2 million units of capacity, and reduced headcount by 32,000.

Since 2007 we’ve implemented hundreds of product enhancements, and we’re seeing the results in improved quality. In fact, Chrysler had the industry’s lowest number of recalls in 2008 as reported by NHTSA. In addition, internal warranty data shows that we achieved the lowest warranty claim rate in our history, with a 30 percent improvement in the last 12 months.

With the bridge loan Chrysler recently received from the federal government, we can continue the restructuring and transformation that will allow us to build the fuel-efficient, high-quality cars and trucks people want to buy.

Of course, in a market as competitive as the North American auto industry, you have to give customers reasons to buy. That’s where innovation comes in—specifically, customer-focused innovation. The spirit of innovation has been part of our DNA from the beginning, and it continues to drive today’s product development.

Take the all-new 2009 Dodge Ram as a prime example. This full-size pickup is boldly designed, tough as nails and packed with a host of game-changing innovations like the segment’s first coil-spring multi-link rear suspension and a unique new cargo management system called RamBox™. Inside, you’ll see an emphasis on sophistication and craftsmanship in the materials and the precise fit and finish.

The new Ram also offers sophisticated uconnect® technology that includes a 30-gig multimedia infotainment system, Bluetooth connectivity, a segment-first surround-sound system, and Sirius backseat TV. You can also get uconnect web, a dealer-installed Mopar® feature that transforms the Ram into a mobile Wi-Fi “hot spot” with Internet connectivity in and around the vehicle. We’ve been in contact with 500 early buyers and we’ve received tremendous feedback. Let me tell you, everyone who drives this truck loves it. And that’s why Ram is doing well in a down market; in fact, sales were up 10 percent from November to December.

At the heart of the Ram is our next-generation, 5.7-liter HEMI® V-8 with fuel-saving MDS technology and variable cam timing. It churns out 380 horsepower, a 10 percent increase—and 404 foot pounds of torque. Even with all that increased capability, we improved fuel economy by nearly 5 percent. And the engine has been recognized by Ward’s AutoWorld.

Twenty-five years ago we invented the minivan, and we’ve remained the leader by paying attention to customer needs and continuously improving the product. Just last week, it won the Detroit News’ Reader’s Choice Award for best family hauler. Over the years, there have been more than 65 innovations or inventions that appeared first on Chrysler minivans. And now we’re reinventing the minivan again, as you can see with this Chrysler Town & Country EV prototype that is on display at the auto show.

This range-extended electric vehicle was developed by our internal ENVI group. It combines the drive components of an electric vehicle with an integrated, gasoline auxiliary power unit and generator to power the electric drive when needed.

The system provides a total range of about 400 miles, including 40 miles of zero-emissions, all-electric operation. Keep in mind, about 80 percent of Americans drive less than 40 miles per day. With this kind of fuel economy, the Chrysler Town & Country EV really is the perfect fuel-efficient family vehicle.

Without question, Chrysler understands the visceral appeal of automobiles. For driving enthusiasts, last year we brought out the all new Dodge Challenger—an up-to-date, thoroughly modern interpretation of the classic American muscle coupe. The SRT8’s® 6.1-liter HEMI engine generates an awesome 425 horsepower and 420 pounds feet of torque, and it’s mated to either an all-new six-speed manual or a proven five-speed automatic transmission. And you can get this same great package in the Challenger SE, which provides outstanding performance with the fuel economy of a V-6 and an attractive entry price point of $22,545. The Challenger is also an example of how fast Chrysler can move, as we took it from concept to production in just 21 months.

Powertrain advances are essential to meeting our customer expectations for quality, performance and fuel economy. In the 2009 model year, 73 percent of our vehicles improved on the previous model year’s miles-per-gallon. We’ve also invested in an all-new family of fuel-efficient V-6 engines that will join our lineup in 2010. The new Phoenix V-6 replaces seven engines from four engine families.

We have continued to invest in future products. We have 24 major launches on tap in our product plan that we’ll roll out over the next 48 months, including all-new versions of key products such as the Chrysler 300, Dodge Charger, Jeep Grand Cherokee and Dodge Durango. We’ll also be bringing exciting new small cars to our lineup.

Led by our internal ENVI team, we are making electric drive a primary path to developing advanced propulsion vehicles. Just like our SRT group, they really demonstrate that a small group of passionate and talented people can make a major impact. The ENVI group has developed five electric-drive prototypes that you can see now at the Chrysler exhibit in Cobo Hall.

One of these is the Dodge Circuit EV, which features ENVI’s all-electric technology. It’s a no-compromise performance car that has a driving range of 150 to 200 miles using an all-electric powertrain that includes an electric motor to drive the wheels, an advanced lithium-battery system to power the motor, and a controller that manages energy flow. The Dodge Circuit EV puts up some pretty impressive numbers. Like zero-to-60 in less than 5 seconds, and a quarter mile in 13 seconds. But its most impressive number is zero—as in zero gasoline consumption and zero tailpipe emissions.

The Chrysler 200C EV Concept is a range-extended electric vehicle with beauty and brains. It evokes a timeless beauty that marries the organic form and language of our design roots with a level of sophistication and technology never before embodied so elegantly in a Chrysler vehicle.

The team of designers and engineers in our Advanced Interior Design Studio are working up front together—using state-of-the-art design software and computer modeling—to dramatically improve the quality, and the fit and finish, of our interiors.

The 200C also showcases Chrysler’s ‘uconnect future,’ a host of unique, trend-setting innovations that will ultimately provide unprecedented convenience to consumers.

The uconnect applications on the 200C reflect our focus on convenience, socialization and synchronization.

Here’s just one example of the cool features, a “smart” phone can be programmed to start the vehicle, adjust power windows and locks and set vehicle temperature. In addition, an in-vehicle camera can monitor security of the vehicles. If your vehicle is lost or stolen, the phone can even disable the vehicle and locate it using satellite imaging. Over at the auto show, we created “Connectivity Kiosks” that allows you to try out all these features, and I really encourage you to do so.

To support our long-term growth, we’ve established Global Engineering Centers in China, India, Mexico and Eastern Europe, staffed by about 1,000 technical people. These centers help us secure global sourcing for existing and future components, facilitate joint ventures with other companies, and help design and develop systems and products for the local market.

These centers also enable us to use our engineering resources on a 24/7 basis—which is another way to increase our speed to market.

I began by talking about the Chrysler-Fiat alliance, and I want to close by emphasizing again that alliances and partnerships support our growth strategy. The key is finding mutual benefit—creating value and enhancing the ability to meet customer needs. The potential advantages include speed to market, cost reduction, expansion of the product portfolio and factory utilization.

For example, Chrysler manufactures all Volkswagen minivans, and we will assemble a Nissan full-size truck. Meanwhile, this year Nissan will begin building a small car that we will sell in Latin American markets. Nissan will also manufacture an all-new small car for us based on a unique Chrysler concept and design.

To sum up, Chrysler today is an agile, customer-focused company dedicated to building products with great quality and great value. And we are a company that recognizes a social responsibility to deliver environmentally friendly, fuel-efficient, advanced vehicles. With our new ENVI products, and by leveraging strategic alliances, we will meet that responsibility.

Thank you very much, and I look forward to the panel discussion.