Can Chrysler Turn Itself Around?

Bob Nardelli prowled the stage of the Detroit Athletic Club like a caged animal. Made famous by Michael Moore's documentary "Roger & Me," this was the same fusty, old venue that ejected Moore as he hunted down then GM chairman Roger Smith. But last Friday, all eyes were focused on Nardelli.

The new 59-year-old CEO of Chrysler was out to show that he'd brought some of the intensity he learned as a protégé of Jack Welch at General Electric before going on to become Home Depot's CEO. Speaking without cue cards to a room full of automotive reporters, he was heavy on GE-speak, waxing on about his "vertical learning curve" and "granularity." And his pacing presence on stage evoked Welch's "management by walking around" technique. But near the end of his performance, he threw some red meat to the crowd with a hint that Chrysler's product line is getting an overhaul. "We just can't have emotional attachments," he insisted, "to some of the brands and products that are out there."

That Chrysler's lineup needs a serious tuneup shouldn't come as a shock. After all, Chrysler is losing billions and has fallen to fifth place in sales in the U.S. market. Obviously, its big-gulp SUVs and pickups aren't exactly what America is after in these days of high gas prices and even higher anxiety. But here in Detroit, where the highways are still filled with American cars, denial runs deep. I recently brought up the 50th anniversary of the Edsel to a Ford exec and he started bragging about all the Edsel fan clubs that are still out there. Before the mercy killings of Oldsmobile and Plymouth earlier this decade, GM and Chrysler spent billions keeping those comatose brands on life support long after their vitals had flat-lined. For heaven's sake, Ford is still rationalizing the existence of Mercury. When's the last time Mercury came up with a must-have car?

So Nardelli's suggestion that he might euthanize brands and models at Chrysler got the assembled auto writers revved up. When he descended from the stage, he was mobbed in a scene that reminded me of the rushing reporters knocking over the phone booths in the movie "Airplane." Does Chrysler have too many SUVs? What brands are you going to kill? Nardelli backtracked—slightly. No, he's not doing away with the Dodge, Jeep or Chrysler brands. But it's time to get Darwinian about what's sitting on showroom floors. "We have to look very hard at some of the products within those brands," he told the throng of jostling journalists, "and make some tough choices."

Getting tough and getting real seems to be what Chrysler's new owner, Cerberus Capital Management, is all about. Stephen Feinberg, the brains and bucks behind Cerberus, quickly got down to business when he took over Chrysler on Aug. 3. Three days later, he brought in Nardelli to run the automaker and demoted CEO Tom LaSorda, despite earlier promises that the incumbent was his man with a plan. A few weeks later, Feinberg picked off Lexus's top marketer, Deborah Wall Meyer, to become Chrysler's chief marketing officer. And then the most stunning move of all: last week Feinberg lured away Toyota's top American executive, Jim Press, to become Chrysler's vice chairman. That was quickly followed by the hiring of GM's former top Asia executive, Phil Murtaugh. The conventional wisdom here in Detroit is that Feinberg and his $23.5 billion private equity firm are writing some mighty big checks to attract all this blue-chip talent. And the shadowy billionaire certainly doesn't expect his new crew to do business as usual. That's why Nardelli is signaling that he's breaking with the Detroit tradition of dithering over dying models.

So what's on Nardelli's hit list? Plenty. But first let's talk about Nardelli's hit man: Jim Press. The 37-year Toyota veteran is no one's idea of a contract killer. A soft-spoken industry statesman, Press, 60, comes across as a kindly automotive grandfather—not a ruthless godfather. But in Toyota's Japancentric, consensus culture, he managed to push through most of the products on the road today that have made it America's No. 2 auto company. Press didn't always get his way with his Japanese overlords. They wouldn't listen, for example, the first few times he insisted they develop a big pickup truck for this big country. But he never let up, and he eventually won the argument. Today, Toyota makes massive pickup trucks at a sprawling new factory in Texas, America's epicenter of big. "Inside Toyota," says George Peterson, auto analyst with AutoPacific in Los Angeles, "they call him Jim Pressure."