Chrysler's `Cloud Cars' Take Aim at the Imports

Company has price advantage but battles perception of poor quality

CHRYSLER'S newest sedans may have their heads in the clouds, but their wheels are firmly on the ground.

Collectively known as the ``cloud cars,'' the Chrysler Cirrus, Dodge Stratus, and an as-yet-unnamed Plymouth model could grab a chunk of the compact sedan market long dominated by imports such as the Honda Accord and Nissan Altima.

``This is the first product by Chrysler to really be a direct assault on the Japanese in the lower-middle segment, where the Japanese get a third of their US volume,'' says marketing consultant Chris Cedergren of the AutoPacific Group.

The cloud cars also will face some tough competition from the Ford Motor Company, which will launch two new compacts of its own this fall. And Chrysler will have to convince import-oriented buyers that Cirrus and Stratus can live up to the tough-quality benchmarks set by the Japanese.

``They're not going to buy it just because there's a new car out there from Detroit,'' acknowledges Steve Torok, general manager of the Chrysler/Plymouth division. ``We're going to have to prove it to them.''

That's precisely what Chrysler had in mind earlier this month when it sent several dozen reporters and industry analysts out on a meandering ``ride and drive'' north of San Francisco. Like other recent additions to the Chrysler lineup, the Cirrus prototypes displayed at the event were sleek and stylish. But consumers may be more intrigued by the ``cab forward'' element of their design - basically, a midsized interior packed into a compact body. Cirrus has nearly as much interior room as the longer Ford Taurus.

``Very competitive,'' was how American Honda Executive Vice President Takeo Okusa described the cloud cars after viewing them at the Detroit Auto Show earlier this year. Price should make them even more competitive. Not long ago, Japanese imports averaged thousands of dollars less than their American competitors. A strong yen and sharp cost-cutting by the Big Three has turned things upside down.

The '95 Cirrus LX will list for $17,970, including a V6 engine, antilock brakes, air conditioning, dual airbags, and shipping charges. That's $1,500 below the price of a four-cylinder '94 Honda Accord and $7,000 under the V6-powered '94 Toyota Camry.

The bottom-end Ford Contour sedan will come in almost $1,000 under the Cirrus, but the Ford will not have as many upscale standard features. The Dodge Stratus, which debuts in the spring of 1995, is expected to carry a base sticker of around $15,000, undercutting Contour.

The cloud cars are being pitched to Baby Boomers and more upwardly mobile people in their 20s. These discriminating buyers are used to the nearly defect-free products of Toyota, Honda, and Nissan.

``So it's important Chrysler hits its quality bogey right from the start,'' says auto analyst Joe Phillippi of Shearson Lehman Brothers Inc.

For a company that otherwise seems to be doing nothing wrong, quality may prove to be Chrysler's Achilles' heel. Though the number of vehicles affected was minuscule, Chrysler made headlines when it recalled its new Neon three times - barely a month after the subcompact was introduced last January.

This summer, the influential J. D. Power Initial Quality Survey reported that Chrysler products scored below the industry average. The IQS looks at the number of defects and other problems reported by buyers during the first 90 days they own their cars.

``We don't have a quality problem. We have a perception problem about quality,'' argues Chrysler's frustrated president Robert Lutz.

Mr. Lutz insists that Chrysler's poor showing in the IQS had more to do with the survey methodology than any real quality problems at Chrysler. Nevertheless, the company is taking steps to make sure the cloud cars will be up to snuff - and score well in the next Power report.

To make sure that all possible gremlins have been tamed, the initial ``ramp up'' of production will be painstakingly slow. And every Cirrus and Stratus built at the Sterling Heights, Mich., assembly plant will be given a brief test run on a small track before they are shipped to dealers.

Meanwhile, Chrysler has hired an outside consultant, Process Development Company, to advise it how to score better on the Power IQS.

``They teach you how to win,'' Lutz says. While Power officials expressed anger at the news, Lutz insists that most automakers now use consultants to improve their scores. And in the process, he says, consumers will get even higher-quality cars.