Automaker offering richest discounts of Big Three to knock down inventory
DETROIT - Chrysler Group is offering its U.S. dealers incentives of up to
$1,250 per vehicle sold this month and next in order to clear excess
inventory in the run-up to the summer car shopping season, dealers said
Chrysler has struggled with high inventory levels this year, prompting the
unit of Germany's DaimlerChrysler AG to offer the richest consumer discounts
of any of the domestic automakers.
The reliance on customer rebates and incentives cut Chrysler's first-quarter
earnings by more than half, even though the automaker has scored with some
top-selling vehicles and avoided the losses and erosion of market share that
have plagued both General Motors Corp. and Ford Motor Co., the other members
of Detroit's Big Three.
At the end of April, Chrysler had an 80-day supply of vehicles in inventory,
the company has said, above the two-month supply that it has targeted as a
more desirable level.
On average, Chrysler offered a consumer discount of $3,769 in the first four
months of the year, more than the $3,189 offered by Ford or the $3,050 by
GM, according to industry tracking service Autodata.
Chrysler, which last week announced a zero-percent financing offer for new
car and truck buyers, also asked dealers to take more vehicles for May and
June, a move that would cut into its own unsold inventory of over 586,000
vehicles as of the end of April.
Dealers that accept the additional vehicle shipments and meet sales quotas
can receive cash of up to $1,250 per sale, dealers presented with the offer
It was the second dealer incentive program that Chrysler has rolled out this
year, leaving some dealers uncertain of whether they would be better off
carrying the additional inventory.
The move comes at a time when higher interest rates have also boosted the
cost of holding dealer stocks of unsold cars, traditionally one of the
largest single costs for showroom operators.
"Obviously, they've got a problem and we've got a problem," said Jim Corwin,
owner of Corwin Chrysler-Jeep in Hickory, Pennsylvania. "It's getting to the
point where I think we're all busting at the seams at the dealer level."
Corwin said that he had benefited from Chrysler's earlier dealer incentive
program but was still working to sell down about half of the additional
vehicles he had taken on.
Dealers were positive about the potential boost from Chrysler's offer of
zero-percent financing through July 5.
"The zero percent really moves iron," said Alan Helfman, the manager of
River Oaks Chrysler-Jeep in Houston.
Helfman said he was still considering whether to take Chrysler's offer of
cash payments for accepting additional vehicles this month.
Dealers that did not accept the offer could be undercut by others in the
same geographic market, who would use the additional cash back to drive down
prices on a range of vehicles, he said.
"It's very tough if you don't do it," Helfman said. "You're at a heck of a