Surging Chrysler Targets BMW With Brawny Luxury 300 SRT8

Chrysler Group LLC, for all its improved performance lately, doesn’t sell a lot of luxury cars to wealthy aficionados of German sports sedans. The new Chrysler 300 SRT8 is out to change that.

With a sticker price that can top $60,000 and a souped-up Hemi engine that kicks out 470 horsepower, the 300 SRT8 is getting rave reviews reminiscent of its 1950s and 1960s muscle- car days. Road & Track magazine called the 300 SRT8 a “brute in a suit.” Wired magazine deemed it “a nearly perfect car,” while the New York Times (NYT) said it “delivers 90 percent of the German cars’ performance for barely half the price.”

Those are heady notices for a company that sells just 1 percent of its vehicles in the rarefied $50,000-and-above price range. And favorable comparisons to high-end hot rods like Bayerische Motoren Werke AG (BMW)’s $90,000 BMW M5 sedan and the $89,800 Mercedes-Benz E63 AMG from Daimler AG (DAI) can do a lot to elevate the Chrysler brand, known more for the Town & Country minivan than for sumptuous supercars.

“It’s a halo vehicle that shows the ability of Chrysler to make a car that size with that kind of power and torque,” Jesse Toprak, vice president of market intelligence at TrueCar Inc., said in an interview. “I don’t think the competition can stand the one-on-one comparison, with all the features and pricing of a 300. It’s a lot of value for your money.”

Growing Stable

The 300 SRT8 joins the $116,000 Viper SRT TA, set to be revealed next week at the New York International Auto Show, in a growing stable of tricked-out versions of Chrysler Group cars. They’re the latest sign of a company that’s hitting its stride. Chrysler has posted 35 consecutive monthly U.S. sales gains, matching the company’s longest streak, which ended December 1994.

Chrysler, projected by analysts to lose market share in 2012, increased annual sales more than any major automaker other than Toyota Motor Corp. (7203) and Honda Motor Co. The automaker’s profit rose ninefold last year to $1.67 billion, its second straight money-making year after emerging from bankruptcy.

Chief Executive Officer Sergio Marchionne, who also leads majority owner Fiat SpA (F), is relying on Chrysler to sustain earnings and counter losses, expected to continue at least through 2014, for the company’s mass-market brands in Europe. The Turin, Italy-based carmaker would have lost 1.04 billion- euro ($1.34 billion) in 2012 without Chrysler.

Bigger Margins

If Chrysler is able to make a dent in the luxury market with the 300, it would be just one more plank in the company’s recovery.

Higher-margin models like the 300 SRT8 can help Marchionne achieve his goal to close the profit-margin gap with U.S. competitors. Marchionne has said Chrysler will get about a 6 percent modified operating margin by 2014, from 4.4 percent last year and 1.8 percent in 2010. Ford Motor Co. (F) said its automotive operating margin was 5.3 percent last year, and General Motors Co. (GM) reported an adjusted EBIT margin of 5.2 percent.

Chrysler has a ways to go in luxury, though. The company sold only about 1,600 of the 300 SRT8 in the U.S. last year. And to get buyers to part with more than $50,000 takes some coaxing. Among urban auto enthusiasts, the 300 SRT8 isn’t likely to be viewed as a competitor with the BMW M5, rather it would be compared with the smaller M3, which starts at $55,290, said Myles Kovacs, president of Los Angeles-based DUB magazine.

“Comparing the SRT8 to the M5 makes it a great value,” he said. “But I see the SRT8 in the same category as the M3, which is a very refined car. The difficulty for the SRT8 is that entry-level luxury is the most competitive.”

Luxury Image

The 300 SRT8 wins buyers upgrading from the 300 as well as GM’s Cadillac CTS or large BMW or Mercedes sedans, Ralph Gilles, the respected designer who heads the SRT brand for Chrysler, said in an interview.

“I’m a a big believer that there are a lot of people out there who work really, really hard, like a nice car to drive and on the weekends blow the steam out,” he said. “It kind of rejuvenates you for Monday. That’s the whole idea of having cars like this.”

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