Chrysler Fights Back

In a move so unconventional that it left Detroit openmouthed. the Chrysler Corp. last week announced its plans to introduce a "new" Dodge next month--spang in the midst of the 1962 model year. Normally, the introduction of a new car model requires extensive retooling, which is far too costly and too time-consuming to do more than once a year. But Chrysler will turn the trick by an ingenious bit of hybridization. The new Dodge, which has been christened the "Custom 880" and which will be larger than any current Dodge model, is to be built on the chassis of the 1962 Chrysler Newport, will sport the cleanly styled Newport body from rear bumper to windshield, and 1961 Dodge Polara metal from the windshield forward.

Ingenious as it is, the entry of the 880 is one more reflection of the tribulations that have cut Chrysler's share of the U.S. auto market from 14% in 1960 to 10% at present. Despite disappointing sales of its 19615, Chrysler clung to its losing bet on wedge-shaped European styling, and added some neo-fin details in most 1962 models. Result: its daily sales rate last month slipped nearly 16% below December 1960 while the auto industry as a whole was scoring a 7.4% gain. By New Year's Day, Chrysler dealers had stacked up an So-day supply of cars v. an average 41-day stock for the industry as a whole. Last week, moving to cut its unwieldy inventories, Chrysler laid off 2,600 production-line workers.

Paring to Size. Gloomy as Chrysler's current situation appears, however, its future possibilities look better because of the quick profit-and-loss reflexes of President Lynn Townsend, 42--a cool, no-nonsense executive who took over from the flamboyant Lester L. ("Tex") Colbert. Last year, while he was still administrative vice president, Townsend fired 7,000 white-collar employees and sold off a clutch of Chrysler plants and office buildings in an effort to bring the company's overhead into line with its present share of the auto market.

Townsend went on to merge the Chrysler-Imperial division with Plymouth, cutting overhead still further. To inspire Chrysler's wobbly dealer network, he offered sales incentive payments of $50 on every Dodge and Plymouth sold by dealers who order their full 1962 quotas. Under Townsend's prodding, Chrysler is building sales and service facilities that it will lease out in areas where potential dealers are unwilling to invest their own money.

Back in the Black. Determined to give his dealers a more appealing car to sell (it was too late to do much about the 19625), Townsend three months ago hired away from Ford able Stylist Elwood Engel, who created the clean, sculptured lines of the 1961 Lincoln Continental. And to restore Chrysler's longtime reputation for pacing the auto industry in engineering innovations. Townsend has handed his engineers a blank check to develop a gas turbine engine (TIME, Jan. 5, 1962).

Though it has yet to show up in sales, this determined assault on Chrysler's cumbrous structure has already shown up in the company's books. By his overhead surgery, Townsend has cut Chrysler's break-even point from 1,000,000 cars a year to 800,000. Late last month, at a meeting in Detroit, he was able to announce that, despite its whopping $21 million loss in the first nine months of 1961, Chrysler's books for the full year would be in the black by "several million dollars"--thanks to a combination of low er costs, tax credits, and improved business in the company's nonautomotive products (air conditioning, military contracts, etc.). Before he is through, Townsend confidently expects to send Chrysler's auto sales curve soaring again. Says he brusquely: "The biggest product tear-up ever is in the works for next fall."

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