Amid Price War, Chrysler to Revamp Manufacturing; Move to 'Flexible' Plants Aims to Improve Efficiency In Fragmented Auto Market
TRAVERSE CITY, Mich. -- DaimlerChrysler AG's Chrysler Group plans a major revamp of its manufacturing process that it hopes will shave billions of dollars off the cost of developing and producing cars over many years.</br></br>The move reflects how U.S. auto makers have begun to rethink basic assumptions about manufacturing cars and trucks as they seek a way out of the intense price war, and surge in overseas competition, that has sapped their North American profits since 2001.</br></br>Chrysler's new manufacturing process, which will be rolled out this fall at a plant in Belvidere, Ill., that is among the company's biggest money-losers, is intended to allow the flexibility to build three or more completely different models of cars in a single plant. Typically, U.S. auto makers produce one or two types of vehicles per plant. The idea behind the retooling is to improve the odds of a plant operating at close to maximum capacity -- a big key to profitability in a capital-intensive industry like autos.</br></br>Chrysler has been making money this year, thanks to the success of a line of three similar models -- the Chrysler 300, the Dodge Magnum and Dodge Charger, all of which are built at one Canadian plant. But amid heavy competition, it still faces pricing pressures similar to those being felt by rivals General Motors Corp. and Ford Motor Co. Both GM and Ford have been slashing prices to move cars and trucks off their lots, a strategy that has boosted sales but hammered profit margins. Yesterday, the two introduced new strategies for emphasizing low sticker prices.</br></br>The long-term challenge for Detroit's car makers remains ending the cycles of overproduction and binge-discounting that have characterized the U.S. market since 2001, and better matching production to shifting consumer demand. In recent years, Detroit has invested too heavily in vehicles that consumers didn't end up wanting in huge numbers.