Chrysler LLC SWOT Analysis

CHRYSLER SWOT ANALYSIS

Strengths

Reputation for V-8 Hemi engine

Chrysler has been known as the lead of horsepower race since 1951 when the company unveiled its V-8 Firepower engine, also called Hemi engine. Hemi has been recognized as sign of powerful machine for over 50 years. For this reason, Hemi was also Chrysler's profit machine. Though Chrysler announced to limit the use of Hemi for its new products recently, the reputation that Hemi created for Chrysler will be supportive to the company's auto engine initiatives.

Domination of minivan market

Chrysler has been the dominant of minivan market for over 25 years. Although the auto market has shrunk recently and many players have tried to expand their market share, Chrysler and Dodge still hold over 40% share of U.S. minivan market. This position would bring the company advantages over the competitors if the Chrysler gives more focus on this market.

Focus on customer

Chrysler is the first auto company having Chief Customer Officer. Even though customer care was not a strong point of Chrysler before, the company has give more focus on customer care by appoint Douglas Betts to the Chief Customer Officer. This move is a significant improvement in customer services and able to create great competitive advantage.

Weaknesses

Small and declining market share

Despite the dominant position in minivan market, Chrysler's overall market share is still small and declining. In 2009, the company's market share was only 9.2% (The Wall Street Journal, 2010), dropped from 11% of the previous year. Though the company gained a bit improvement in market share by September 2010 (9.5%, The Wall Street Journal, 2010), this is still too small in comparison with other automakers.

Management problems

It is said that the merger with Daimler in 1998 had made Chrysler "a German-inspired mess" before Cerberus Capital Management acquired it in 2007. Additionally, analysts notice that the new owner does not have experience in auto industry and "doesn't want to be in the auto business; it is in the money business". The acquisition by Cerberus is thought to be "the beginning of the end of Chrysler as a recognizable automaking entity altogether".

Quality problems

Chrysler's vehicles usually present in the list of worst vehicles ranked by Consumer Reports and J.D. Power. This will definitely have negative affects on the customer's buying decision.

Opportunities

Partnership with Fiat

The strategic partnership with Fiat would create opportunities for Chrysler. Though minivan and SUV are Chrysler's strong points, Chrysler needs to have smaller car in order to penetrate to South America or Asia market. Whereas, Fiat is well know for its smaller cars. Thus, the partnership with Fiat would be helpful for Chrysler to produce small car for new markets.

Increasing demand for green cars

The green car market is on the rise and forecast to top 3 million by 2015, of which U.S. market will account for 55%. As manufacturing green cars is one of the Chrysler's focuses, this will be a great opportunity for the company to improve its position.

Threats

Disappointed dealers

Under the control of Daimler, the dealer consolidation initiative "had drained their passion for selling cars" because they had to "take more products than they could possibly sell". The new owner has not resolved the problem and this would be a big obstacle for the company's business.

Reliance on U.S. market

Chrysler is known to reliant on U.S. market as more than 90% of its sales comes from North America. Therefore, the company would be very vulnerable with the declining demand and fierce competition in this market.

CHRYSLER'S MARKETING POSITION

Chrysler LLC is known as one of the 30 world largest automakers whose focus is on U.S. market where the company dominates the minivan segment. Chrysler's Hemi has been the symbol of powerful vehicles for over 50 years. Nonetheless, the company has encountered management problems that have disappointed the dealers. In addition, product quality has not been significantly improved and its small market share has kept shrinking. In an effort to improve the situation, Chrysler has chosen Fiat as a strategic partner. Chrysler hoped that this partnership would help the company penetrate to small car market in U.S. and other countries. Moreover, the partnership would also support the company's focus on green cars for those the demand has been on the rise.

As analyzed above, Chrysler has a weak marketing position in the auto market so far. In order to improve the company marketing position, it is recommended that Chrysler should take prompt actions to improve the dealership policies and give more attentions to quality issues. Successfully resolving these problems will help the company handle other issues better and create new competitive advantages.

Reference:

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