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DaimlerChrysler shifts up a gear

Off-road appeal: The Mercedes-Benz M-class is the strongest selling passenger vehicle in the luxury brand's portfolio at present.

Sales of Mercedes and Chrysler brand products are in a healthy growth phase as the company prepares for a changing of the guard

26 Jun 2000

THE departing managing director of Chrysler Jeep Australia, Stephen Shugg, feels he accomplished "a hell of a lot" in the past two years.

Mr Shugg is soon to return to the US to look after DaimlerChrysler sales in the western USA. Ms Judith Wheeler will replace Mr Shugg about August.

Mr Shugg was responsible for overseeing the transition of Chrysler from the hands of an independent importer to the factory-owned distribution network.

"We helped to operate a company that wasn't ours while at the same time negotiating to take back our distribution rights," he said.

"We started our own company, moved it from one city to another, and merged it into another company. We gave birth to the distribution company Chrysler Jeep Australia. We helped to re-establish the two brands." Mr Shugg is realistic about the company's performance over the past 18 months.

"Sales aren't necessarily where we would have liked them to have been," he said.

"In the first year we had a tremendous start-up costs, so we didn't make a profit. This year isn't over yet, so I'd like to think we could be profitable. With added volume comes profit."But Chrysler Jeep is not likely to enlarge its line-up too far in the next few years with no right-hand drive production likely for a mainstream large car until about 2004.

Mr Shugg said Chrysler wanted volume and would want to compete in the large car (read Falcon, Commodore) market. However, only the next generation 300M Chrysler sedan is likely to offer a right-hand drive option in the foreseeable future.

The same problem prevents Dodge trucks coming to Australia. Chrysler has looked at Dakota pick-ups (sized similarly to LandCruiser or Patrol), while the V10 RAM super Ute would be an obvious image leader.

But the company will not pursue a local conversion option and cannot source right-hand drive utes from the US at a cost which would make sales viable.

Mr Shugg said Chrysler recognised 23 per cent of the driving world used right-hand drive. DaimlerChrysler's new global outlook (it wants to grow Asian revenue from 3.5 per cent to 25 per cent within the decade) requires all new platforms to offer a right-hand drive option.

Mr Shugg said exchange rate pressure was likely to lift Chrysler Jeep pricing unless the US/Australian dollar relativity moved back towards 65c to the US dollar in the near future.

"If it stays in the high 50 cent region we will have to take action," he said.

Chrysler is growing its business footprint by encouraging buyers to patronise its in-house financing system.

Mr Shugg said 20 per cent of buyers last year opted to fund purchases through the financial arm of DaimlerChrysler Australia.

He hopes this will rise to as much as 40 per cent of business within two or three years. This will boost the business "debis" operates in Australia quite significantly.

Chrysler Jeep has only been offering the debis financial packages for just over a year since the importation Chrysler Jeep vehicles switched from Astre Automotive to DaimlerChrysler Australia.

Meanwhile, the soon to depart president and chief executive officer of DaimlerChrysler Australia/Pacific, Mr Bernt Schlickum, said the company's business in Australia was in a high growth phases.

He said business in Australia would amount to $1.6 billion for 2000, up from $1.3 billion in 1999. This includes vehicular, aeronautical and marine and rail transport systems.

Greater logistical and back office synergies between Chrysler Jeep and Mercedes-Benz - and potentially with Mitsubishi and even perhaps Hyundai/Kia - could help DaimlerChrysler to even better results in the future.

Mr Schlickum, who has been the head of Mercedes-Benz in Australia since 1979, will be replaced by Mr Roman Fischer who has been the managing director of Mercedes-Benz Australia passenger cars for the past two years.

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