The US Treasury released a $17.4 billion bailout plan for its domestic auto industry last Saturday, $13.4 billion of which is to be granted to two of the three auto giants this month and next month. General Motors is slated to get $9.4 billion while Chrysler will receive $4 billion. The day before the news was released, Chrysler headquarters announced the exit of Philip Murtaugh, a legend in the US auto industry, from the Chinese market.
Murtaugh’s departure is followed by the steady shrinking and adjustment of Chrysler’s business in China. While maintaining part of its administration and market communications business in its Beijing office, Chrysler plans to largely downsize other departments including sales and marketing. Meanwhile, the company’s recruitment plan for proposed engineering and R&D departments in China has been halted.
　
Murtaugh quit only 15 months after he joined Chrysler after working for 32 years for GM, the last ten of which he spent as chairman of GM (China). Murtaugh was believed to be one of those who best understand the Chinese auto market, and the best candidate to help Chrysler restore its status in China. Murtaugh successfully built his reputation with over 30 years�experience in Asia Pacific branch of GM and SAIC, but his luck ran out after choosing the wrong company at the wrong time in the wrong place.
Chrysler’s crippling difficulties in North America are forcing the company to largely cut its overseas business, which has been suffering heavy losses. Last Friday it halted production at over 30 US factories for one month to reduce its huge stock.
Murtaugh’s withdrawal is only a part of Chrysler’s adjustments. Ten or more senior managers including the heads of sales and regional markets will transfer to other positions or leave the company. Deborah Meyer, who moved from Toyota (America) to Chrysler as vice president and CMO in August, 2007, is leaving as her position has been eliminated. The changes were announced by Chrysler within an hour of the White House announcement of the bailout effort.
The changes reflect Chrysler’s efforts to maintain itself in the vital North America market. Annual sales of less than 20,000 cars have given Murtaugh’s Chinese market little influence at Chrysler headquarters. Chrysler declared it would refocus on its Asia Pacific business, and adjust and reinforce sales and marketing functions in Asia Pacific, especially China. Meanwhile, the company also said it would continue seeking for business partners and strategic alliances worldwide, including new opportunities in China. Chrysler’s headquarters will take up these functions.
Chrysler doesn’t find its fit
The most urgent problem for Chrysler’s China efforts is the lack of joint venture with a Chinese automaker, which is crucial for the establishment of sales and production. Murtaugh was very good at establishing production centers in China and developing local suppliers following GM and Ford’s path, but Chrysler has wasted a lot of time in finding a proper business partner in China.
Chrysler’s difficulty in China comes from its failure to accommodate itself to the Chinese market and its too complicated and inefficient relations with business partners. Its partners in China include Daimler, Chery, and Great Wall Automobile Group.
"Some of these complicated relations stem from historical reasons, and some others come from Chrysler itself," A former Chrysler insider told China Business News.
Due to Chery’s dominant position, Chrysler’s cooperation with Chery broke up in December this year. Chrysler signed a memorandum, also under Murtaugh’s leadership, with Great Wall Automobile Group, but the two parties have made no substantial move after that. Murtaugh sought to cooperate with SAIC and Guangzhou Automobile Industry Group Company (GAIG) at the beginning of this year. Murtaugh had several discussions with GAIG top management this year, but his efforts appear to have been fruitless.