Page 103 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

lieutenants returned the next day with concrete proposals
for the reductions Chrysler had demanded. 2

What truly differentiated Chrysler, however, was its focus on
improving efficiency—which would be a competitive advantage
under any circumstances. Attempting to compensate for its
scale disadvantage in relation to the “Big Two,” Chrysler
increased its production efficiency by 50 percent. The assembly
lines for Chrysler’s Plymouth brand reached production levels
of 90 cars per hour in comparison with 60 cars per hour at both
GM and Ford, which enabled Plymouth to realize the highest
profit per unit of any discount auto brand at the time. Although
Plymouth had half the sales volume of Chevrolet, it generated
70 percent more profit per unit.
In addition to managing costs effectively, Chrysler also made
vital moves to support the top line. Understanding that sales in
a severe recession were more likely to come from a budget vehi-
cle, Chrysler had the courage to open new dealerships and
expand its advertising and marketing support (thanks to lower
advertising rates) for Plymouth, its discount brand. As sales of
more expensive brands plummeted, Plymouth sales surged.
Even while it successfully coped with the Great Depression,
Chrysler kept its eye on the long term. Chrysler saw that the
nationwide highway-expansion program, undertaken as part of
the New Deal, would create a demand for faster, more powerful
cars. Accordingly, the carmaker continued to invest in research
and development during the tough times. It was the first man-
ufacturer to use wind-tunnel testing as part of a design and
engineering process that produced more aerodynamically effi-
cient cars. Chrysler’s Airflow design and semi-unit-body con-
struction innovations quickly became the industry standard.

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