Chrysler-pt-austria.jpg” width=135>The first Austrian-built Chrysler PT Cruisers have rolled off the assembly line at DaimlerChrysler‘s Eurostar factory in Graz. Chrysler says the factory’s flexibility has enabled it to add the PT Cruiser to the same production line as the Voyager minivan, which started production in January. Producing both vehicles on one line will allow the factory to easily adjust volumes of either product, depending on customer demand.

That flexibility has also enabled Eurostar to reach top quality much earlier in the pre-launch phase by building early prototype vehicles on the production line to validate processes and train employees.

The plant held a “Job One” ceremony today, marking the first day customer-ready vehicles began rolling off the production line.

Eurostar Managing Director Gary Cash was joined by Herbert Paierl, Minister of Economy & Finance of the state of Steiermark; Alfred Stingl, Mayor of Graz; major suppliers, community leaders and hundreds of employees at the ceremony.

Chrysler will eventually produce up to 50,000 PT Cruisers each year in Austria, supplementing output from the main factory in Toluca, Mexico. DaimlerChrysler announced last April that Toluca output would increase during 2002 from 180,000 to 260,000 per year.

Eurostar will build around 15,000 of the retro-look minivans in Europe this year as it ramps up to full capacity. It is currently building right and left-hand drive two litre petrol engine versions for Europe, Asia-Pacific and Africa.

“The PT Cruiser underscores the Chrysler brand’s commitment to offering unique and innovative alternatives on an international scale, and with the start of PT Cruiser production in Europe, we are further realising the global potential of the brand,” Chrysler group President and CEO Dieter Zetsche told journalists by conference call.

Ironically, European PT Cruiser production is just getting under way as German dealers report they are having to discount prices of U.S.-built models already in stock to sell them.

A report in this week’s edition of Automotive News Europe says that, while US customers are still happy to wait several months for their cars, or pay a premium for immediate delivery, German buyers’ interest in the model “has cooled off considerably”.

The motor industry newspaper quotes an unnamed German dealer as saying that price cuts of 5% to 8% are common and that some dealers have lowered the price by as much as 12%.

“I’m not sure how long I will be able to keep a firm stance on the price,” the dealer told Automotive News Europe.

“There is pressure on the price now and it will increase when the cars are produced in bigger numbers in Graz,” the German dealer is quoted as saying.

Zetsche acknowledged that the initial surge of demand for the PT Cruiser following its early 2000 launch had levelled off in both the USA and some export markets

“After the tremendous initial demand that some dealers experienced, there has been some slow-down in some special cases,” he said.

“But it’s definitely not a phenomenon which would be true across the board.”

Zetsche added that, since the PT Cruiser was launched, DaimlerChrysler hadn’t done any marketing of the car apart from normal press and public relations activity.

“We are grateful [that] you and your colleagues did such a good job for us,” he told

“So far, PR has been our only form of communication with our [potential PT Cruiser] customers.”

Although he did not divulge details, Zetsche’s remarks hinted that Chrysler is planning a major marketing blitz now that European production is ramping up and U.S. market supply from Toluca is close to matching demand.

“You have to do a full life cycle management with every product,” he said.

“We are thinking about offering additional driveline and body style options but nothing is decided yet. We are very relaxed and confident about the future of the product.”

Chrysler has already displayed finely-finished ‘concept’ sporting, turbocharged and cabriolet versions of the PT Cruiser at a number of key international motor shows to gauge potential customers’ reactions.

Zetsche confirmed that diesel-powered PT Cruiser models would be introduced in Europe by the end of the year as 2002 models.

These are likely to use a European-made VM turbodiesel of around 2.5 litres, similar to the engine Chrysler already buys in for the diesel Voyager models built and sold on the continent. However, Zetsche did not confirm this.

The president and CEO said that Chrysler group sales in Europe year-to-date are 4.6% up on the same period last year in a “slightly declining market” and that Chrysler was “one of Europe’s top brands in June”.

“We’re interested in maintaining our momentum and we think we’ll do better with more diesel engines,” Zetsche said.

Eurostar also produces right and left-hand drive 2.4- and 3.3-litre petrol and 2.5-litre common rail diesel versions of the larger Voyager minivan for Europe, Asia-Pacific and Africa.

Strategic Review-


The plant currently operates on two shifts, with 1,900 employees, and has the capacity to build 100,000 units annually.

Eurostar is also a benchmark training site to share best practices in quality and efficiency between the production systems of Mercedes-Benz and the Chrysler Group while the company is also benefiting from a combined international supplier and logistics infrastructure.

The adjacent Steyr-Fahrzeugtechnik (SFT) plant has been producing the Jeep Grand Cherokee and Mercedes-Benz M-Class on parts of the same production line since the merger of Daimler-Benz and Chrysler Corporation in 1998.

DaimlerChrysler can now make about 150,000 vehicles a year in Europe – 100,000 PT Cruisers and Voyagers at Eurostar and 50,000 Jeep Grand Cherokees at SFT which builds them under contract.

“We do have the capacity to attract [additional] volume models and there is no need to consider using Mercedes-Benz plants,” Zetsche said.

“They are all operating at over 100% capacity utilisation and even if we wanted to we couldn’t use them.”

Zetsche said that Chrysler sees Europe as its key market outside the NAFTA grouping of the U.S., Canada and Mexico.

“Latin America is very difficult at the moment now and not only for us. The exchange rate fluctuations mean that low-volume, high-priced vehicles are not feasible there at the moment.”

On the other hand, Zetsche said, Chrysler is “doing fine” in Australia (from where its importer also covers the small New Zealand market) and also sees growth opportunities in Asia and Japan.

“Asia has additional potential,” he said. “Our partnership with Mitsubishi might give us additional strength there, in particular support for further developing our dealer network.”

South Africa was also a strongly developing market where Chrysler had tripled sales so far this year, Zetsche added.

To view related research reports, please follow the links below:-

Automotive regional report: Western Europe

The world’s car manufacturers: A financial and operating review