Chrysler to revamp fading midsize cars

Sebring, Avenger to get upgrades before 2013 replacement

Alisa Priddle / The Detroit News

Chrysler Group LLC is counting on significantly higher sales of its midsize sedans to meet ambitious growth targets outlined last week in its five-year business plan, but the automaker has not been competitive for at least a decade in the market's largest vehicle segment.

The Auburn Hills automaker, whose U.S. sales have fallen 39 percent this year, has been particularly stung by poor quality and consumers leaving for other brands.

Chrysler executives are quick to admit to their struggles and acknowledge that the company cannot delay revamping the subpar Chrysler Sebring and its only slightly better sibling, the Dodge Avenger.

Demand is anemic -- amid a 25 percent decline in U.S. auto sales this year, Sebring sedan sales have plunged 70 percent while Avenger is down 45 percent, according to Autodata Corp. And the Sebring's poor quality and styling have tarnished the Chrysler brand among many consumers.

Yet Chrysler's management team, led by CEO Sergio Marchionne, has made midsize cars a cornerstone of the automaker's plan to increase global sales and market share and return to profitability in 2011.

Today, midsize models account for 23 percent of Chrysler's 1.3 million vehicle sales worldwide, but the company plans to increase that to 28 percent of 2.8 million vehicle sales in 2014, said Joseph Veltri, Chrysler's vice president of product planning.

In the U.S., midsize sedans account for 22.9 percent of all auto sales; Chrysler plans to almost double its share of that market to 3.4 percent in 2014. It is a highly ambitious plan and analysts believe the odds are stacked against the carmaker.

"It's common knowledge the Sebring is the midsize car to stay away from," said John Wolkonowicz of IHS Global Insight, a financial and marketing research firm in Lexington, Mass.

Chrysler executives say the situation calls for a two-part fix: The Sebring and Avenger will get refreshed interiors, exteriors and engines next year, followed by the introduction in 2013 of all-new replacements for the Chrysler and Dodge sedans. Those models will be engineered by Italian partner Fiat SpA and designed and built by Chrysler.

"Unless you are present in the (compact and midsize) segments in the U.S. you are nobody," Marchionne said last week after presenting Chrysler's five-year plan. "The problem with this organization is it does not have competitive cars in this segment."

That's why Chrysler isn't immediately scrapping the sedans altogether. The current Sebring and Avenger have been on the market long enough to have paid for themselves so refreshing them doesn't require wholesale new investment. But Marchionne recognizes the cars cannot continue to be sold as they are now designed.

To help bridge the gap until the upgraded models go on sale late next year, Chrysler will introduce a customized Sebring Ocean edition, targeted at consumers in coastal states. It will be unveiled in January at the Detroit auto show and hit the market in the first quarter of 2010.

Analysts are divided on the wisdom of spending money now to fix vehicles that will be scrapped in a few years.

"They're throwing good money after bad," Wolkonowicz said, adding that he has studied the effectiveness of so-called midcycle changes "and they are a waste of money."

The sedans must look new and different, and probably have new names, he said. "Without a drastic new exterior, you won't get people in to appreciate the new interior and better engine."

If the improvements don't elevate the product, "they are better off not having it," said Stephanie Brinley, a product analyst with AutoPacific Inc. in Troy. "Continuing with a mediocre product has the potential to be more damaging than useful."

Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor, put it even more bluntly: "No marketing can save the Sebring."

But the sheer size of the midsize segment and forecasts of continued growth leave Chrysler little choice, said Michael Robinet, vice president of global vehicle forecasts for research firm CSM Worldwide in Northville. "Having an anchor vehicle in that segment is critical to success in this market."

Chrysler has not had a credible midsize contender since the K cars of the early 1980s -- the Dodge Aries, Chrysler LeBaron and Plymouth Reliant. K cars accounted for 10 percent of the segment in 1982, and sold 350,000 to 385,000 units a year from 1981 to 1986, said John Sousanis, a director with Ward's Information Products, which tracks automotive data.

Midsize cars have been the largest vehicle segment for decades, he said, and "it's likely to be the volume leader for most companies for a number of years."

The Sebring, however, has saddled Chrysler with a reputation for poor quality and styling. It has scored badly in quality surveys and been lambasted by critics.

Marchionne does not dispute the problems.

"The Sebring does not match up in its current configuration against where the competition is," he said. "That's why we've intervened."

Chrysler could have waited for the all-new models in 2013, Marchionne said. "Or I could have invested in the Sebring platform now to bring it back and effectively take out everything that is bad in the architecture and rebuild the car around the existing architecture.

"We decided to take that route because it's the fastest way to cure the problem."

Tammy Darvish of DARCARS Automotive Group in Silver Spring, Md., which owns a number of dealerships that sell a variety of brands, said midsize cars are a dealer's bread and butter. In her experience, refreshed vehicles fail to excite consumers, she said. Addressing quality is as important as styling.

Marchionne is essentially asking consumers to give Chrysler time to become a solid contender again in midsize cars. "Everything has been pushed to make sure by 2010 we have viable vehicles," he said. "Then we will fight the battle with what's coming in 2012 and 2013."

Whether the strategy will work remains to be seen. There will still be better competitors on the market in the short-term, CSM's Robinet said. "But at least (the Sebring) won't be the woefully inadequate vehicle is it now."

apriddle@detnews.com (313) 222 - 2504