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Chrysler replaces two top executives, splits Dodge brand

Peter Fong, who led the Chrysler brand, and Michael Accavitti, who led Dodge, were promoted just months ago. They left voluntarily, Chrysler says. Ralph Gilles, Fred Diaz and Olivier Francois move up.

October 06, 2009|Ken Bensinger

Chrysler has put bankruptcy behind it, but turmoil at the company continues.

The troubled automaker on Monday replaced two top executives less than four months after promoting them and at the same time announced plans to split its Dodge brand in two, creating an all-truck Ram division.

Although Chrysler said the departures of Peter Fong, formerly head of the Chrysler brand, and Michael Accavitti, who led Dodge, were voluntary, the moves raise questions about the focus of the company's business plan as it tries to rebuild.

"It's not one or two analysts that are confused by this move," said Rebecca Lindland, auto industry analyst at IHS Global Insight. "The entire industry is scratching its head on this one."

When Chrysler emerged from bankruptcy in June, it was put under the control of Italian automaker Fiat, which now holds 20% of Chrysler.

Fiat's top executive, Sergio Marchionne, became chief executive of Chrysler and immediately announced sweeping changes at the Auburn Hills, Mich., company.

Known for an unorthodox, results-oriented style that turned Fiat around in just a few years, Marchionne greeted his new employees with news that five senior executives were out and 23 new managers, including Fong and Accavitti, were in.

The few months since then have been marked by continued sales declines, broken alliances with other automakers and rumors of problems in Chrysler's product pipeline.

Still, Monday's abrupt departures, as well as the decision to expand brand offerings while the rest of the auto industry is cutting them, came as a surprise.

Effective immediately, Chrysler has installed Ralph Gilles, the automaker's top designer, to head Dodge. Fred Diaz, who oversaw the automaker's Denver office, will lead the Ram brand and oversee overall Chrysler sales. Olivier Francois, who runs Fiat's Lancia line of autos, will take over the Chrysler brand as well and manage marketing for all of Chrysler.

Management of the Jeep brand will remain unchanged.

"This reorganization allows us to protect and develop the unique nature of the product offerings within the Dodge brand," Marchionne said in a statement.

Among industry watchers, the promotion of Gilles raised the most eyebrows. A well-regarded designer, he led the team that created the popular Chrysler 300 sedan as well as the redesigned Dodge Ram full-size pickup.

But it's exceedingly rare in the auto industry for designers to reach high management positions, said Eric Noble, president of consulting firm CarLab. The only comparable move, he said, was made in July by General Motors Co., which named its top designer in North America, Bryan Nesbitt, to head the Cadillac brand.

"It's a long way from being a great designer to being somebody that has bottom-line responsibility for an entire brand," Noble said.

Still, Gilles' appointment sparked speculation that Marchionne's plans included focusing the Dodge brand on highly styled, distinctive vehicles while freeing the automaker's trucks to retain their utilitarian appeal and sending the Chrysler brand upmarket.

Just last month, Fong told reporters that he aimed to move Chrysler "a notch above Lincoln, a notch above Cadillac."

Through the first nine months of the year, sales of the Chrysler brand were down 52%, worse than the overall 40% sales decline for all Chrysler brands.

Even as its sales decline, the automaker appears ever more isolated in the rapidly changing auto industry.

In August, Chrysler said it was canceling an alliance with Japanese automaker Nissan Motor Co. that would have had it producing trucks in exchange for small cars.

Last month, automakers Mitsubishi Motors Corp. and Hyundai Motor Co. pulled out of a partnership to build small engines with Chrysler in a Michigan plant.

And just last week, Chrysler sued its former owner, Daimler, over blocked shipments of parts for some of its vehicles; it said it also was forced to temporarily halt production of its popular Jeep Wrangler because of problems with suppliers that it declined to identify.

Chrysler spokesman Gualberto Ranieri declined to comment on the automaker's brands, its product lineup or the possibility that vehicles from Fiat's portfolio, which includes the Alfa Romeo, could come stateside soon.

Instead, he said, Chrysler will reveal its full plan for the next five years next month in Michigan.

"There is a quite clear strategy aimed at continuously refining the company and its management team," Ranieri said. "These and all other questioned will be answered in November."


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