Chrysler Should Concentrate On What It Does Best

Implications: If Chrysler hasn't demonstrated the ability to engineer a great vehicle in a market segment, hire somebody else to do it. The seeds of a strategy to do that lie in last weeks deal with Nissan. The question is whether Chrysler will decide to maximize its strengths or continue to dilute its resources.

Analysis: Chrysler's deal last week with Nissan demonstrates an important, often overlooked fact about the automaker: Chrysler does some things better than any car company in the world, and other things better than most.

The company's future may hinge on recognizing that truth and leveraging the clout leadership brings.

At the same time, the company should not waste resources developing vehicles it's not good at.

The new Chrysler aims to become profitable selling 2 million vehicles a year. That's 676,000 fewer than it sold worldwide in 2007.

There's been a lot of talk about Chrysler reducing the number of models it builds, but a more fundamental truth lies in those numbers: Chrysler has to reduce the number of vehicle architectures. An architecture is a set of structures and components used as the underpinnings for a variety of different vehicles.

Chrysler is too small to afford any mistakes. Develop a subpar vehicle and you're stuck with it for six years or more. The answer lies in the current product line, however. Today, Chrysler builds four or five architectures that are among the world's best in their categories: Full-size Pickups  (Dodge Ram) Minivans  (Chrysler Town & Country and Dodge Caravan) Rear Wheel Drive Cars (Chrysler 300, Dodge Charger, Dodge Challenger) Small SUV (Jeep Wrangler) Larger SUV (Jeep Grand Cherokee)

There's plenty of evidence of Chrysler's capability in those segments. Nissan is getting out of big-pickup engineering because Chrysler does it better. Volkswagen gave up trying to build a minivan and hired Chrysler to build it one. If Chrysler were selling, it would find plenty of buyers for vehicles based on the next-generation 300, Wrangler and Grand Cherokee.

All Chrysler's efforts should concentrate on widening its lead in those areas