Brash newcomer challenges incumbents at VW, Renault, Opel

RUSHTON, England -- The little Dodge Caliber is being unleashed on Europe, and its secret weapon is price.

DaimlerChrysler has already established a bridgehead for American cars in Europe with its utilitarian Chrysler minivans and stylish sedans like the 300C, and Jeep SUVs.

The Voyager and Grand Voyager minivans, the trendy PT Cruiser and nifty Crossfire roadster have intrigued Europeans. The outrageously styled 300C is currently turning heads in London, Paris, Berlin and Milan. It's not clear yet whether this is inspired by lust or derision. Sales for the 300C and its even bigger Touring stablemate will reveal all. Meanwhile, Jeep Cherokees and the new Jeep Commander are building up a following.

Now for the biggest task: establish Dodge, a brand with zero visibility in Europe. The order of the day: capture sales with the Caliber from Europe's established favorites like Germany's Volkswagen Golf, France's Peugeot 307, and Ford Europe's Focus in the market's most important, compact car segment, accounting for about 25 percent of the whole market.

Chrysler has ambitious sales targets for Europe, planning to double annual sales from 2005's 97,000 to about 200,000 by 2009. Dodge hopes to account for 80,000 vehicles of this total by 2009, mainly Calibers and later the Nitro SUV, and then the high-performance SRT4. Currently, it sells just a few Vipers. Last year it sold a trickle of Neons.

Some analysts doubt that these numbers are attainable, although the Caliber has some strong points in its favour. It is big, brash and aggressive-looking compared with the relatively bland, understated European competition. Thanks to the weakness of the dollar against the euro, Caliber prices are mouth-wateringly attractive. And Chrysler has made sure that the Caliber range includes a diesel engine, a must in Europe where about 50 percent of all new cars are frugal oil-burners, not surprising when you consider that pump prices here are still at least twice more than in the U.S.

The Caliber, about to go on sale across Europe, is offered with either a 1.8 or 2.0 litre petrol engine, or a 2.0 litre diesel.

Aggressive prices

"The Caliber is very aggressively priced," said Professor Ferdinand Dudenhoeffer, managing director of Bochum, Germany-based automotive analysts B&D Forecast.

"In Germany it is priced at €14,900 ($18,650), which is about €5,000 ($6,250) below the comparable VW Golf, and about €3,000-€4,000 ($3,750-$5,000) below the comparable Opel Astra and Ford Focus," Dudenhoeffer said.

Opel of Germany is owned by General Motors.

"Further, the Caliber is available with a 2.0 litre VW diesel engine. This is an attractive combination for customers here," he said.

Even so, Dodge sales are unlikely to reach their targeted 80,000; 50,000 is more likely, but that would still be an impressive total, Dudenhoeffer said.

Over ambitious?

Walt Madeira, British based Europe Sales Forecast Manager for CSM Worldwide, also thinks 80,000 is a bit ambitious.

"In Europe many competitors are heavily entrenched. If Dodge hits 60,000 by 2009, it will be considered a success as the brand is taking its first steps to gain consumer awareness," said Madeira.

Given that the Dodge brand is completely unknown in Europe, wouldn't it have been more economic to brand the new Caliber a Chrysler? After all, the Chrysler brand now has some presence in Europe, and the car the Caliber replaced, the worthy, cheap but dull Neon, was badged as a Chrysler.

"DaimlerChrysler did well to bring in Dodge to Europe. It is an expensive option in the short term, but the seeds planted today will bear fruit in the future. Dodge is filling a gap in the group's brand image portfolio which is a sporty image targeting younger buyers who are more individualistic and want their car to mirror their own personal image. Young, trendy customers want big, powerful, well designed vehicles," Madeira said.

Moving upmarket

"Looking at Chrysler, when the cars first came to Europe, consumers pinned them as gas guzzlers, low quality, American poor build and not value for money like Japanese vehicles. Now the group has turned the strategy around 180 degrees. The Chrysler brand is moving up market targeting other brands focussed on quality/luxury like Ford's Jaguar and GM's Cadillac. The new 300C is an eye-opener. In the center of London the other day, a 300C passed by and everyone waiting to cross the road turned to watch it pass by," he said.

Despite this, Madeira didn't expect Chrysler sales to reach the 2009 target of about 200,000, reckoning that 150,000 to 175,000 was more realistic. But Krish Bhaskar, who heads the Motor Industry Research Unit (MIRU) based in Nice, France, was more optimistic about sales prospects for Chrysler Jeep, and felt 250,000 including Dodge was possible by 2010 or 2011.

More pickups

"In general they can spread 250,000 sales in Europe, although I wouldn't recommend they try more. Dodge makes sense as long as it is viewed as a sub-brand and sold through Chrysler/Jeep dealers (which is the plan). As Chrysler moves upmarket it makes sense to try and establish the more down-market Dodge with pickups and the like," he said.

Bhaskar felt there were plenty of other niches to be filled in Europe with products like the Dodge Dakota and Ram pickup trucks and Dodge Durango SUV. "Chrysler should use salami tactics, not big volumes, but a slice of 5,000 here, 10,000 there across Europe," said Bhaskar.

As for the Caliber, B&D Forecast's Dudenhoeffer felt that sales would be an uphill struggle, despite keen prices, because of the lack of brand awareness, and quality problems.

"The interior, the plastics look rather cheap. The majority of customers will come from the Koreans, including Chevrolet, and the Japanese. I don't think it will be possible to attract VW Golf or Audi A3 customers during the first model generation," he said.

Small Chevrolets sold in Europe are made by South Korea's Daewoo for its majority owner General Motors.

Diffuse, confusing

Dudenhoeffer agreed that it made sense to introduce the Dodge brand in Europe because Chrysler's range was very diffuse and confusing to customers with vehicles like the big Voyager minivan to the Crossfire two-seater, PT Cruiser and 300C.

"If Chrysler offers an additional car (the Caliber) or even an SUV (the Nitro) it would become more and more chaotic in the mind of the customer. Thus, it would not be possible to create a strong brand. Therefore it makes sense in the long run to have a specific brand for cars with the horn (the Dodge badge)," Dudenhoeffer said.

As for Chrysler-Jeep sales of up to 250,000; no chance.

"If they will arrive at 150,000 cars in 2009, they would have done a good job," he said.

According to the more bullish Bhaskar of MIRU, Chrysler can look forward to decent profits from its European operation despite the huge costs.

Europe can keep a U.S. plant open

"Chrysler can make money, even though Europe is the most expensive market to distribute with all the languages and different laws. If the dollar went back to parity with the euro the operation might become marginal, but they would still want to do it because sales of about 250,000 (Chryslers, Jeeps and Dodges) are the equivalent of one plant (in the U.S.)."

"Chrysler is looking for exports to keep plants open. Western Europe will keep one plant open, and maybe some other part of the world will keep another plant open, although I'm not sure that the rest of the world is ready for Chrysler yet," he added.

Source: detnew.com