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• The CleanEnergy WorldTour 2001 comes to California
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• Ford Motor Company Appoints Executives To Brand, Finance Roles
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• First half of 2001: Audi even better than expected
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• Lexus Introduces Two New IS 300 Models
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• The leading brand in Western Europe, Renault, along with Dacia and Samsung, increased first half 2001 unit sales by 11.6% in the rest of the world.
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• Cadillac Forms A New, Stronger Professional Vehicle Team
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• Chrysler Group Announces Evolution of Product Creation Process
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• Hayes Lemmerz Announces Plans to Close Petersburg Facility
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• Oracle and Wingcast Form Strategic Alliance to Drive Next-Generation Wireless Services for Cars
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News of  July 18, 2001

Chrysler Group Announces Evolution of Product Creation Process

• "Product Innovation Teams" To Build on Chrysler's Platform Team Approach
• Objective is to Create Optimum Balance Between Creativity and Discipline
• Positions Company for Improved Quality, Faster Development Times, Lower Cost
• Ensures Long-Term Success of the Company
• Draws on Best Practices Across DaimlerChrysler AG; Provides Potential to Leverage Links Throughout Entire Organization

AUBURN HILLS, Mich. - The Chrysler Group announced a new product creation system intended to more closely link the major disciplines of the entire organization, while positioning the company to achieve reduced vehicle development times, improved quality and sustained profitability.

The new process is based on the formation of Product Innovation Teams, which tie Product Development (Design and Engineering), Manufacturing, Procurement & Supply, and Marketing even more closely together at all levels to create a more holistic vehicle development process.

The new system builds upon the successful platform team approach pioneered by Chrysler in 1989.  This new approach provides greater focus on the "up front" part of the product creation process, which includes setting the vision and purpose of every new vehicle.  The main difference is that the organization ensures all major areas are involved in product creation at every stage, while spreading best practices throughout the entire system.

"This is our new blueprint to more quickly and efficiently develop and market a complete portfolio of distinctive vehicles under the Chrysler, Jeep(R) and Dodge brands," said Chrysler Group President and CEO Dieter Zetsche.  "It provides the potential for sustained profitability, while allowing Chrysler Group to do what it does best: create innovative cars and trucks that set us apart from the competition.  This balanced approach is what we call 'disciplined pizzazz.'"

The Product Innovation Teams consist of three major initiatives:

• A Product Strategy Team, which is responsible for the "ideation and discovery" phase of a new vehicle program. This team of senior-level officers analyzes customer trends, new design ideas, technological innovation, the macroeconomic environment and other key strategic issues even before a business case is made to develop and build a new vehicle line.

• Product Teams, which will now be managed under the co-leadership of Engineering, Manufacturing and Marketing.  Evolved from the company's platform team concept, these teams are renamed, but still divided into five vehicle groups -- Small Vehicles, Premium Vehicles, Family Vehicles, Activity Vehicles and Trucks - as well as a Powertrain team that supports the product teams as before.

• Component Teams, which assure consistent strategies for innovation, design excellence and quality, while reducing complexity through more sharing of components. Component teams ensure a single voice to the supplier base.  Together, they also draw on best practices across DaimlerChrysler AG, including Mercedes-Benz, and create the potential to leverage links throughout the entire organization as well as with the company's alliance partner, Mitsubishi Motors Corp.

These teams all work in concert with the Chrysler Development System (CDS), which provides the process for vehicle creation from the vision of the program all the way through production, using a system of "quality gates" to assure predetermined objectives are met at every stage.

While the Product Strategy Team and parts of CDS are already in place and have been supporting the recent new product launches of the 2002 Jeep Liberty and Dodge Ram, other new elements of the Product Innovation Teams are now being put in place.  Products planned for public introduction as soon as the 2004 model year will realize the full benefit of the Product Innovation Team initiative announced today.

Product Strategy Team Drives Vision, Ideation Phase

Under the realignment, the Product Strategy Team, a small group of top executives across key areas of the company, will interact with the other teams to set the definition and parameters of any potential new product.  The team is charged with analyzing a wide range of input, including new marketplace trends, new design ideas, the latest and most relevant technological innovations, the macroeconomic environment and other key strategic issues even before a business case is made to develop a new vehicle.

Product Teams Build On Platform Team Approach

While the new product teams are evolved from the platform team concept, the vehicle groups are now led by a core team comprised of Product Development (Engineering and Design), Manufacturing and Marketing.  Under the previous system, a senior-level officer was designated to oversee the platform as the general manager.  The new structure places one of the three core team members as the core team leader.

Product teams will be divided into areas similar to the previous platform team structure -- Small Vehicles, Premium Vehicles, Family Vehicles, Activity Vehicles, Trucks and Powertrain.

Component Teams Balance Value and Innovation

A key element of the Product Innovation Team initiative is the creation of component teams, charged with maximizing value through innovation and quality for a specific vehicle area or subsystem, while reducing complexity across all vehicle lines.  Replacing the more informal 'Tech Clubs' used under the platform team structure, component teams will be divided among the major areas of a vehicle -- Body, Exterior, Interior, Electrical and Chassis -- and reside within the product teams.

Each component team will also form an alliance with a designate from Procurement & Supply, providing the capability to leverage the company's know-how to achieve the best levels of quality, technology and design while maximizing cost advantage.  They also will facilitate more component sharing across the vehicle groups where such synergies make sense, while preserving the distinct character and emotional appeal of each brand through unique exteriors and interiors.

Additionally, these teams will provide a single voice to suppliers for increased efficiency and improved communication.  In total, about 50 component teams will be in place by the end of this year.

"The purpose of these teams is to increase our quality, innovation and overall efficiency on several levels," said Zetsche.  "While the platform teams under the previous structure learned from each other and improved the process with every successive new product launch, this approach really is much more comprehensive and mandates best practices across the entire organization. It enables us to drive down complexity by reducing the variety of parts or subsystems used across our vehicle lines under the skin -- while maximizing our opportunities and freeing up resources to concentrate on the distinct personalities of the Chrysler, Jeep and Dodge brands."

Chrysler Development System (CDS)

Once the scope of a new vehicle vision is defined, the program will be assigned to one of the five product teams and follow a comprehensive process for the entire development cycle, from the earliest stages of the program through design confirmation and ultimately, to production launch.

The Chrysler Development System (CDS) is already underway at Chrysler, with this system serving as the blueprint for every new product program. The CDS employs a series of phases, or "quality gates," similar to a system used by Mercedes-Benz, to ensure all performance, quality and cost objectives are met or even exceeded.  Taken together, these 11 gates are designed to promote earlier planning and accurately gauge customer needs, reduce cycle time and waste, define and employ best practices across all product programs and achieve 100% of all pre-established targets.  Each product team will be responsible for achieving objectives in accordance with the CDS.

Product Team -- Core Function Representatives

Product Development  Manufacturing  Sales & Marketing

• Small Vehicle: Larry Lyons - TBD - Paul Wilbur

• Premium Vehicle: Eric Ridenour - Frank Faga - Steve Bartoli

• Family Vehicle: Gordon Rinschler – TBD - Ron Hein

• Activity Vehicle: Craig Love - Rodney Peters - Mike Kane

• Truck: Frank Klegon - Jamie Bonini - Darryl Jackson

• Powertrain: Floyd Allen - Tom LaSorda - TBD

Chrysler Group Product Strategy Team

• Dieter Zetsche: President and Chief Executive Officer

• Wolfgang Bernhard: Chief Operating Officer

• Rich Schaum: Executive Vice President, Product Development and Quality

• Jim Schroer: Executive Vice President, Global Sales and Marketing

• Trevor Creed: Senior Vice President, Design

• George Murphy: Senior Vice President, Global Brand Marketing

• Mike Evans: Vice President, Product Planning

(July 12, 2001)

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