3 questions for Chrysler CEO Sergio Marchionne

[January 11, 2012]  DETROIT (AP) -- The chief executive of Chrysler -- which invented the minivan -- says people don't really like driving them.

But with kids, they have to.

That attitude has hurt sales and will keep growth very low in coming years, says Sergio Marchionne. But Chrysler is trying to make the minivan more appealing.

Marchionne, 59, discussed the vehicle and other topics at the North American International Auto Show in Detroit. His remarks are edited for length and clarity.

The minivan's future

Sales of the versatile people haulers began falling in 2000 when they became passe. And Marchionne thinks the market will grow by only a small amount in the coming years.

"People buy minivans because they have to," Marchionne says. "We've determined that it's a question of utility and necessity, otherwise people don't want to be driving minivans."

Chrysler must upgrade its vans on quality, fuel efficiency and appearance, with better engines and transmissions, he says.

Chrysler showed off a minivan concept at the auto show in Detroit: the sleek-looking 700c. It looks more like an ultra-modern Ford Explorer than it does a minivan. But it still has sliding doors for entry into the rear seats.

Already the company has fixed brake problems and made the interiors nicer on its Chrysler Town & Country and Dodge Caravan vans, but Marchionne says that's not enough. The next generation needs to be totally reinvented.

"We can light-weight the structure, we can deal with suspensions, we can deal with the powertrains, transmissions -- all that stuff, in a relatively short period of time," he says. "We need to get there a lot faster than I thought."

Marchionne expects to have a version of the 700c to test-market early in the spring. A revamped van can reach showrooms by the end of next year, he says.

Future sticker shock

Hybrid vehicles will become more common because of government requirements that America's car and truck fleet get 54.5 miles per gallon by 2025, he says. That will lift overall prices because hybrids typically cost several thousand dollars more than conventional cars.

"Fifty-plus miles per gallon by 2025 is something which cannot be achieved," with the combustion engine, he says.

But when hybrids become more prevalent, "economies of scale will drive down costs," he says. "They will never eliminate it. But they will drive it down."

Car prices in 2012

Marchionne says he's been stingy on discounts at Chrysler. And he doesn't see a return to the big rebates and discounts of the early 2000s, when Detroit automakers were forced by union labor contracts to offer rebates to move metal and keep their factories humming.

Marchionne doesn't see any "behavioral dysfunction" by automakers to jack up rebates. "Certainly none of the Detroit Three are doing things that are crazy."

Last year, automakers spent an average of $2,524 per vehicle on discounts, low-interest financing and other discounts. That was down about 7 percent from 2010, according to the TrueCar.com auto pricing website. In 2004, at the peak of the discounts, automakers spent an average of $2,937.

[Associated Press; By TOM KRISHER]

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