Can Chrysler Be As Successful As Its Commercials?

It's halftime of the Superbowl. You're watching the game with friends and family when Chrysler's "Halftime in America" ad appears on your screen. Clint Eastwood stares at you, saying that America and Chrysler will be back, stronger than ever. However, it may be easier said than done for Chrysler and its associated brands.

A recent Fortune magazine article highlights several troubles the carmaker has to deal with before it can rise back to its previous market level. Although the company has finally dug itself out of the red (Chrysler earned $183 million in net income in 2011) and has repaid its loans in full to the U.S and Canadian governments, Chrysler is going to need large amounts of cash to develop new car lines in order to further compete with international brands domestically while pushing for expansion into growing markets like China. Chrysler is counting on partners like Fiat Motors to share the costs of model development by sharing factories and technology in automobile production process. This keeps cost low while still creating the quality machines that Chrysler is known for. Sergio Marchionne, CEO of Fiat and Chrysler, has even hinted at taking in a third automaker to cut manufacturing and design costs even further. Before he can even think about adding a new partner, Marchionne must first deal with S&P putting Fiat debt securities on credit watch with negative implications. Fiat's problems revolve around plant overcapacity and declining sales, which can be attributed to the European downturn.

Chrysler needs to accomplish two things immediately: 1. Increase their cash holdings and 2. Fix Fiat. Ultimately, Chrysler's goal is to return to its former market share and expand beyond that. In order to do that, Chrysler needs Fiat to remain successful. As long as Fiat remains intact, Chrysler can continue to use its factories and technology to produce cars at a lower cost. Chrysler could use Fiat resources for distribution as well. Additionally, the Fiat brand image reflects upon Chrysler. A positive brand image for Fiat would act as marketing tool for Chrysler since they operate under the same group. Chrysler Group would have to differentiate Fiat from its European competitors, either through price or design. However, costs can't be cut too low, or the automaker could sustain losses. In addition to the Fiat problems, Chrysler needs to acquire cash so that it can develop new lines. With the development of new, successful lines, profits increase and Chrysler can use the resulting income to expand into untapped markets like China, furthering growth for the company. An IPO would be a solution to the cash shortage. Otherwise, Chrysler has to continue to grow the brand domestically. It is currently doing so by retargeting consumers looking for a quality, luxury vehicle.The vehicles entice car buyers with their sleek, high-end look and powerful performance. Chrysler is also rebranding itself as a company that represents the spirit of America by comparing the automaker's struggles with those of the nation during the economic downturn. It is trying to establish a personal connection with consumers, so that customers will be more willing to buy from Chrysler.

Moving forward, Chrysler will need to prove to the auto industry and consumers alike that its cars and brand name can be just as powerful and successful as the commercials it produces.