More fuel-efficient, smaller cars, new efforts to provide stronger service and a revamped inventory system will be the backbone of financially troubled Chrysler Corp.'s attempt to return to profitability, the company's management team told its stockholders meeting here today.
But the news of the day was still bad. The company reported selling only 36,034 cars during the first 10 days of May, down from 41,523 during the same period last year.
Still, Chrysler's board of directors voted to continue to pay a 10-cent dividend, the rate was lowered from 25 cents last December. Chrysler directors had debated whether to eliminate the payout.
Chrysler President Lee Iacocca, who joined Chrysler only six months ago after holding the same position at Ford Motor Co., did not paint a rosy picture for the near term. He said the automobile market is in "turmoil" because of "the country's energy policy or, I might say, lack of one, the threat of gasoline rationin, dollar-a-gallon gasoline, Sunday and Saturday closings, and the publicity about long lines and stay-at-home vacations."
"In some parts of the country, public concern is close to hysteria," Iacocca said. Consequently, he added, "The demand for small, fuel-efficient cars is overwhelming."
Compacts and subcompacts totalted 47.7 percent of all auto sales. "In 1978, and last month, they took 59.8 percent of all sales," Iacocca said. "That kind of wild fluctuation upsets everyone's planning. We are in a mass-production business, a long-lead-time business, and we can't turn our plants on a dime to stay with the market."
Iacocca said Chrysler's subcompacts, the Plymouth Horizon and Dodge Omni, "are sold out for all practical purposes." He said sales of small cars and trucks made for Chrysler by the Japanese automaker Mitsubishi "are also very strong," as are sales of several of Chrysler's six-cylinder-engine models.
The losers in today's market "are the 8-cylinder car models, and trucks, especially vans and recreations vehicles, an area I might add in which Chrysler has led the industry for many years," Iacocca said.
That is bad news for Chrysler stockholders, who were hoping for improvements in the company's financial position. Two weeks ago Chrysler announced a first-quarter loss of $53.8 million (95 cents a share). But even that was an improvement over the same quarter last year, when the company dropped $119.8 million ($1.98).
Iacocca and Chrysler Chairman John Riccardo outlined plans to turn the company around in the coming year to the 475 stockholders at the meeting - some 225 fewer than attended last year's stormy meeting in Detroit, some 400 miles from here.
There had been industry speculation that Chrysler decided to hold its annual meeting outside of Detroit - for the first time in the company's 54 year history - to avoid the kind of angry confrontation the company's executives had with stockholders last year.
Iacocca gave the specifics of the following five-point plan "we believe will help us negotiate this difficult period.":
Eliminating Chrysler's exclusive "sales bank," the practice of building an inventory at the factory and then selling to dealers from that inventory. Saying that the system "does not work today." Iacocca said under the new program "our plants are to run firm dealer orders." This will result in sharply reduced inventory costs, he said.
Increasing sales efforts through several programs, including the much-heralded addition of a new advertising agency, the former Ford agency, Kenyon and Eckhardt. According to Ricarod, that firm will have at least $100 million to promote the company's products.
Improving product quality through such things as more extensive warranty programs. The company announced recently, for example, a 5-year, 50,000-mile extended warranty plan for the drive train. And Iacocca said new efforts to improve parts avaiability have enabled the company to fill an average of 93 percent of all parts orders on the same day.
Developing more front-wheel-drive vehicles and several new midsize cars. A new luxury 2-door Chrysler "to compete head on with Cadillac and Lincoln," and a new car built in cooperation with Maserati of Italy are also in the company's future, Iacocca said.
Bringing more "discipline throughout the organization" through tough management practices that will be put into effect to streamline operations, and make the company more efficient.
Several stockholder proposals were defeated, most by about 9-to-1 margins. They included requests to limit charitable or educational gifts by the company, and to curtial the bonuses awarded to company officers. One stockholder called on the board of directors to resign and appoint Iacocca chief executive officer.
Chrysler's board also announced the appointment of two former Ford executives to key positions at Chrysler. Gar Laux, 60, was named executive vice president for sales and marketing for the U.S. and Canada, and Gerald Greenwald, 43, also was named a vice president. Both men had spent 22 years with Ford. CAPTION: Picture, NEW PRESIDENT: Eugene A. Cafiero (left), president of Chrysler Corp. until six months ago, yesterday was named president of the fledging DeLorean Motor Corp.'s domestic operations by Chairman Hoh DeLorean (right), a former General Motors Corp. executive. They are shown recently inspecting the DMC-12, a sports car that DeLorean plans to start manufacturing by the end of the year at a new plant in Ireland. Most of the $140 million financing package for the new automaker is in place, and DMC has signed up about 260 of the 400 dealers needed. AP