From a ‘halo’ car to an expensive folly

Roland Jones • Profile • E-mail

Once synonymous with power and brawn, the high-performance Dodge Viper was launched 16 years ago to show off Chrysler’s engineering prowess. These days, in the era of $4-a-gallon gasoline, the Viper is more akin to an expensive folly, and it looks set to become the latest victim of a new era of austerity at Chrysler.

Late last month, Chairman and Chief Executive Bob Nardelli said the automaker is looking at its options for the iconic sports car, including the possible outright sale of the nameplate and its manufacturing facilities. Nardelli said Chrysler has been approached by third parties "interested in exploring future possibilities with Viper."

Chrysler did not disclose who the interested parties are but did say the Viper review is part of a move toward focusing on Dodge’s core products, including the Charger sedan and Ram full-size pickup truck. Press reports and analysts have speculated that Asian automakers looking to move into the global marketplace could be interested in buying the Viper, and that the sale could fetch Chrysler as much as $100 million.

A move to get rid of the Viper would follow similar moves by GM and Ford to shed their non-core assets. GM has said it is looking at selling its Hummer brand, while Ford sold its Jaguar and Land Rover brands to Indian automaker Tata in June.

The Viper was first shown as a concept car in 1989 and launched in 1992 with a powerful V-10 engine and intense consumer interest.

The Viper was conceived to inject some excitement into Dodge’s brand lineup at a time when enthusiasm was lacking, and on that front it certainly delivered, winning a host of accolades and awards over the years. The 2008 Viper ACR, for example, holds the record as the fastest production vehicle to circuit the Nürburgring test circuit in Germany.

But the Viper hasn’t delivered when it comes to sales. Sales are up this year, but fewer than 1,000 units were sold in 2007, and the automaker only sold its 25,000th Viper in March — a very modest number for a company that ships hundreds of thousands of minivans each year.

With a price tag of $85,000, the Viper costs significantly more than the Chevrolet Corvette, which costs just over $50,000. But the Viper is basically a racing car produced for road driving and is not as “civil to drive as a Corvette,” said Aaron Bragman, an industry analyst at consultancy Global Insight. In terms of performance the Viper is closer to a Ferrari or a Lamborghini, he said, leaving it in a very limited market.

“Chrysler never built the thing to make a huge push to corner the market,” Bragman said. “This was all about engineering prowess and having a halo vehicle for Dodge, but the focus at Chrysler is now on making money and making sense, so if you put those things together the Viper becomes expendable.”

In addition the Viper could become a big drain on the automaker’s resources, he said.

An upgrade of the V-10 engine could costs "hundreds of millions of dollars in development costs," Bragman said. "So they can’t really put any more money into the development of the vehicle for such a small return on investment."

Chrysler’s fortunes have come under intense scrutiny since May 2007, when New York private equity firm Cerberus Capital Management agreed to buy a controlling interest in the automaker, which had struggled under the ownership of Germany’s Daimler-Benz. Since the deal, Chrysler has been working to cut costs and move its focus away from out-of-favor pickup trucks and SUVs.

Like its fellow U.S.-based automakers General Motors and Ford, Chrysler is struggling to cope with a severe downturn in the market for new cars and trucks triggered by high gas prices, a weak economy and growing demand for smaller, more fuel-efficient vehicles. (The Viper gets an average 16 miles per gallon.) Chrysler’s U.S. sales are down 23 percent so far this year, even worse than the overall market, which has seen sales drop 11 percent.

Given Chrysler’s troubles, the move to ditch the Viper brand looks like a fait accompli, Bragman said. The vehicle doesn’t share a platform of components with any other product in the Chrysler family, and its production is a fairly “modular” process, with suppliers responsible for much of the pre-assembly work.

A silver lining for Chrysler is that the cash it generates from a sale will allow the automaker to focus on other products, said Alexander Edwards, president of the automotive research division of Strategic Vision Inc., of San Diego, Calif.

“Viper owners may not be happy that it’s leaving the Dodge brand, but sometimes you have to make these sorts of decisions to make yourself profitable, and consumers are simply buying more Hondas and Toyotas than Dodges,” he said. “The money would be better spent on other Dodge products, like the Charger and the Caliber — they are phenomenal vehicles and they should be investing in making those vehicles fresh and learning from their good design cues to use in other vehicles.”

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