Chrysler USA to Raise Output by Up to 40%

09 January 2006

In a climate that has forced two of America's big three indigenous automakers to retard production and slash costs in a manner reminiscent of Freddie Kruger on steroids, Chrysler announced Friday it expects to increase output by "up to 40%" come 2008.

Tom LaSorda, chief executive of DaimlerChrysler's US division told the Financial Times Deutschland that its annual stateside output will reach 3.5 to 4 million units on completion of a two-year investment program costing "less than $3 billion (€2.47bn; £1.7bn). That compares with production of 2.8m cars and light trucks in 2005.

Harry Potter has not taken over as Chrylser's evp of production. Instead, the company has embarked on a program of converting its factories to more flexible production techniques that enable different models to be built on the same production line.

Not only will this make it easier for Chrysler to respond to changes in consumer demand by switching output from one vehicle to another, it also allows it to do so without the costly closure of a production line.

The switch is already under way and LaSorda forecasts that by 2007, with the launch of ten new models, there will be a significant increase in output. He declined to attach any numbers to his claim - or speculate about sales.

Chrysler's strategy is triggered by a sea change in consumer automobile demand, in which the market is moving from a limited range of models produced in very high volumes to a profusion of niche models.

As a paradigm of this trend, LaSorda predicts that most vehicles made in the US market will soon sell only 75,000-150,000 units annually - versus the historic norm of 400,000-500,000.

Data sourced from Financial Times Online; additional content by WARC staff