Chrysler Plans Entirely New Model Line-Up By 1985

As the 1981 model year approaches, Chrysler Corporation faces the greatest challenge of any domestic automaker as it fights to regain its stature in the industry. The rapidly changing market, which in little over a year has switched from full-size to compact cars, has put demands on all the manufacturers to rapidly change their lines to small, fuel efficient vehicles. In an industry that traditionally has a four-year lead time, the demands on engineering and manufacturing staffs are tremendous and in light of personal cutbacks due to the recession, their task is formidable.

No one knows these challenges better than Chrysler's Harold K. Sperlich, executive vice president-engineering and product development. "When you're talking about the decade of the '80s, the job is to replace everything we've got. We've got an industry with a total asset value of $100 billion plus industry-wide. We have to replace it. That's a massive, massive task, and much of it has to be done through the first half of the decade. By 1985, we won't have anything that is in production today. That means a complete change in four and a half years. That means new engines, transmissions, cars and trucks. We have an entire new line of products designed that the company has to manufacture and launch in that short period of time. It's a massive change we're looking at as an industry and massive for us, of course, at Chrysler."

Despite the huge cost, - Sperlich estimates that it will be a $12 billion effort for Chrysler alone, -- the industry has to move in that direction to survive. "We don't have a choice. If we're going to comply with all the rules, regulations and laws and build competitive products, we don't have any choice but to run very fast and spend a hell of a lot of money."

The rapidity with which the market moved towards smaller cars as a result of last year's energy crunch has led to crash programs to bring small front-drive cars to the market in a timely fashion. And that costs money.

"I think the product array that we really need to serve that market is the product array that we are working on and it's not here yet," Sperlich said. "All of us in Detroit are dealing with a 1980 market today with a 1970's product lineup. We literally could use the 1981 cars now, could use the '82 cars now, the '84 cars now. At one time, we looked at the fuel economy regulations and all wondered if that was force feeding the market and whether people were going to buy cars that are as small as we were going to make them to comply with fuel economy standards. Events have changed all that. We can take our '85 line today and we'd be sold out. If we could get that lineup to the market, things would be dramatically different overnight."

With market demand running well ahead of the 1985 CAFE standard of 27.5 miles per gallon, the current talk in Washington of a 40 mpg CAFE by 1995 doesn't faze Sperlich in the least. "It doesn't upset me," he said. "You always have some rhetoric. I'm positive that in the years beyond 1985, by either market forces or by law, we'll be producing cars that average a lot better than 27.5 miles per gallon. I think the market will take us there whether the congressman want to get in and join the parade or not. The market is pretty well going to have us making cars that are over 30 miles per gallon on the average and even as high as 40 mpg. Certainly individual cars will be over 40, but if the whole fleet will ever go to 40, I don't know."

Chyrsler's new K-car is the beginning of the new fleet of cars that the manufacturer will have by 1985. Everything else, including the Omni/Horizon, which was, in 1978, the first domestic front-drive small car, will be replaced. But beyond downsizing, other technologies will be employed to meet the market for small, fuel efficient cars.

"Basically, there are four technologies that "can be used to meet these ends, Sperlich said. "The downsizing, which has been going on for three years now, will continue to go on for another three or four years.

At that point, I think you will see the cars fundamentally with all the wasted space out of them. For a given number of people, we'll have the car wrapped pretty efficiently around the people. You can't downsize the size of a person's leg. I think the downsizing technology wave will have been consumed in the 1977 through the middle of the '80s time-frame. That's one fundamental technology called package efficiency.

"The second fundamental technology is weight reduction," he explained. "Downsizing certainly does that, but beyond downsizing, greater use of lighter weight materials will be employed. If these materials don't price themselves out of the market, there will be greater usage. Finding ways to use those lighter materials effectively without breaking the bank is a technology that will go on after the downsizing wave has stopped."

The third technology, according to Sperlich, is finding more efficiency in drivetrains. That technology, too, will extend far beyond the downsizing era. The challenge in this area is to find more efficient engines and transmissions while at the same time cope with stringent emissions standards and still produce vehicles that drive well and are fuel efficient.

"The fourth technology is aerodynamics," Sperlich said, "which until recently hasn't been a big factor in automotive design. Aerodynamics is a very important part of our business. It has a lot to do with the overall shape, but also the way you handle the details" such as exterior trim, mirrors, window mounting and so on.

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"In terms of the new technology, the first oil embargo in 1973, which caused a recession and contributed to a change in the mix of vehicles in the American market, triggered the downsizing wave," Sperlich said. "In 1994 and 1975, everybody knew that they'd have to downsize all their products and everybody began. But they all had different approaches, GM started by downsizing their big cars first. Chrysler started by bringing out the L-car {Omni/Horizon}. Then last March, when the shah was overthrown and the second gas crisis hit, everyone looked at their plans and said 'we have to go faster.' Everything seems to be going faster because the market is changing so quickly." He said the downsizing was the first major wave in reducing car size and weight to increase efficiency. "The other technologies will be more long term."

What this accelerated pace amounts to is that "there really is a technological revolution going on that will not only see downsized cars, but rather spectacular cars," Sperlich predicted. "We're looking at full-size interior cars, which are obviously small on the exterior, which will have fuel economy that will be spectacular."

He said the two greatest benerificaries of this accelerated pace are the consumer and the engineer. "The engineers have the joy of recreating all that hardware and the customers get the benefit of all that," he said. "But, if you're a company and do all that (changing an entire product line in less than five years), it's very expensive, not only for Chrysler, but Ford and General Motors as well."

In restructuring the car lines and shifting philosophy from rear-wheel drive to front wheel drive, Sperlich said Chrysler is trying to reduce the complexity of their business and in turn boost efficiency and profitability of the car marker.

"We're reducing our complexity as much as we can as we put all this new iron into place," Sperlich said of the sweeping changes. "We're trying to put the most profitable company you can imagine in place. The product we're putting in place has an inherently lower cost, they're going to be smaller, lighter, use less material." By reducing complexity, Chrysler will have "more production manufacturing with fewer platforms. We're going to have one design approach to all our cars. We'll have several families of cars."

There are several advantages to going to all front-drive, Sperlich said. "One of the advantages of going all front-drive is that you can keep everything the same among your cars. You can argue that you're minimizing flexibility, but if you have some rear-wheel drive cars you have some totally different systems, a lot different hardware" which will contribute to complexity and inefficiency.

"As you move to front-drive, the quicker you can get it done the better. I think you get a better product. Secondly, you get a company that is getting back to the efficiency it had before, way back when everybody started with all rear-wheel drive. It was pretty efficient, wasn't it?" he asked. "Our quest for being an all front-wheel drive car company is not just to have the latest technology of front-wheel drive, but to have the efficiency that goes with having all of one thing."

While Chyrsler is struggling to make its way through financially troubled waters, Sperlich sees no alternative but to bear down and keep moving ahead. "In any other business situation, when things are tough as they are in the market, you usually cut back and manage your fixed costs, but if we cut back and manage our fixed costs, in engineering for example, you wouldn't have the progress that's needed to meet the law. You wouldn't make CAFE, emission standards or some law, that's really part of the madness. You have this crazy market in which everyone is having trouble and a lot of problems are because government's got its hand in it. Yet you can't react to it by managing fixed costs better because of regulations that require certain behavior. It's a nightmare for us and it means we're going to lose a lot of money. Your hands are tied by government regulations and you can't react to the changing market."

In assessing the government's role in the industry and the problems with the economy, Sperlich feels much of the trouble is caused by a lack of priorities and everyone's desire for instant solutions. "It's not my subject," he admits, but the only thing wrong with government and the nation is that everybody wants to do everything now. Whether it's consumers who are buying beyond their means and in part fueling inflation," they want it all now. The Arabs want it all now and they're getting it. The politicians want to give everyone everything now to get re-elected and the government agencies and bureaus want all the fuel economy standards and emission standards now because they're trying to do their jobs.

"It's a simple matter of priorities," he said. "The only thing that's missing in this whole nation is a little management of priorities. We've got $400 billion coming in at the national level, someone ought to figure out the best way to spend $400 billion. I really think the problem with the nation and the government is that nobody is managing the priorities. Rather than manage priorities, we're trying to do it all. The net result is an overheated economy. The impact of over-regulation generates awesome price increases that we have to pass on for going this fast. I'm not knocking where we're going, it's the rate we're doing it. There's no wisdom being applied to the question of priorities."

The loser is the public, Sperlich said. "It's madness. To get elected, I guess, you have to promise them even more. The truth is, America is spending beyond its capabilities, whether it is consumers or government. Somehow this nation has got to get together and decide what our priorities are and not try to do more than what we can manage efficiently for the good of the whole. I'm talking about the national budge and the amount and pace of regulation. Somebody's got to start doing something. Like on the project center, you look at projects and say 'this is a good one, it pays out in six months, and this is a good one, they're all terrific.' You get down to the bottom, you find you can't afford them all, so you have to go back and pick those that are most important."

He said the same thing should be applied to regulation. "You know, better fuel economy - terrific, cleaner air - terrific, a chicken in every pot - terrific, but can you afford it all? There has to be some moderation. We really have a nasty set of problems in this industry and the country. The United States of America and the automobile industry have incredible capabilities and hopefully, we're not going to blow it."