Chrysler to offer deals till midnight
Automaker asks dealers to extend hours over July 4 holiday weekend to kick off new incentive drive.
Josee Valcourt / The Detroit News
DaimlerChrysler AG's Chrysler Group is turning the summer auto sales promotion on its head. In what may be a first for the industry, Chrysler, Dodge and Jeep showrooms around the country will be open until midnight throughout the July 4th weekend as Chrysler rolls out aggressive new incentives to help reduced bloated inventories, according to several dealers familiar with the plans.
Chrysler is expected to announce the new discount program Wednesday, the dealers said. It will launch Saturday and run through Aug. 31.
The extended showroom hours, which begin Saturday and run through July 4, are yet another unusual marketing twist from Chrysler. The automaker's new program will also include a 30-day guarantee, a revival of employee pricing for all customers and free financing, dealers and company sources have said.
Chrysler spokesman Kevin McCormick said Monday that details about July incentives have yet to be finalized, but Chrysler CEO Tom LaSorda said last week that employee pricing for all is under consideration.
The ultra-aggressive promotion plans signal just how much Chrysler needs strong summer sales to help clear out a daunting stockpile of 2005 and 2006 vehicles to make way for 2007 models.
The company currently has a 108-day supply of cars and trucks and wants to cut that to 89 days by the end of August. The ideal level is typically about
65 days.
"There was probably a lot of pressure to repeat employee discounts and a lot of pressure to bolster sales," said Rebecca Lindland, an auto analyst with Waltham, Mass.-based Global Insight Inc. "But the fact that they want to keep the stores open until midnight is, dare I say, a little desperate."
Some dealers are also wary.
"We think they're making a big mistake with keeping the stores open until midnight on Saturday," said Dan Frost, president of Southfield Chrysler-Jeep, who will instead keep stores open until midnight July 3- 4.
"A lot of people head north on the weekends so why stay open on Saturday? I believe in Chrysler's sale. I just believe they picked the wrong day."
The new incentive program is expected to be announced Wednesday by DaimlerChrysler CEO and former Chrysler CEO Dieter Zetsche, who is set to appear in a television ad campaign launching this weekend that will tout Chrysler products as offering the best of American and German design and engineering.
Detroit automakers have been trying to refrain from offering deep discounts, which can bolster sales but eat into profits. "(But) it's just too competitive," said Erich Merkle, an analyst with Grand Rapids-based IRN Inc.
Amid news of Chrysler's plans, GM and Ford are also on the move with incentives as the summer selling season heats up.
GM said Monday that it is bringing back its 72-hour sale, which begins Thursday and ends July 5. The program offers free financing for six years for 2006 models, excluding the Corvette sports car, the Pontiac Solstice roadster and G6 convertible, Hummer H1 and medium duty pickup trucks.
Free financing is also available for 60 months on 2006 Cadillac, Saab and Hummer H2 and H3 vehicles, and for 36 months on select 2007 SUVs and the Chevy Avalanche pickup.
GM spokesman John M. McDonald said the move to offer incentives on 2007 models does not contradict the automaker's goal to curb incentive spending.
"What we've said is we'll be very strategic and tactical about our marketing programs," McDonald said. "This is very limited."
Ford Motor Co. spokesman Jim Cain said Chrysler and GM are playing catch-up.
"Ford struck first," Cain said when asked if the automaker plans to roll out employee discounts or extend store hours.
The company's "Drive on Us" clearance for 2006 models, which began this month and includes commercials featuring "American Idol" winner Taylor Hicks, has been "phenomenally successful in terms of buzz," he said.
Chrysler's plan to bring back employee pricing for everyone comes as analysts predict weak June sales compared to last year.
In a report Monday, Merrill Lynch analyst John Murphy predicted that June U.S. auto sales will come in 12 percent below June 2005 levels, a strong month that saw demand grow 12 percent.
Merkle said Chrysler's employee discounts will likely spur the automaker's July sales, but he wasn't sure if extending store hours for four days would generate sales.
"People will find out that the employee discount is for two months and so they'll say, I'll check it out some other time," he said.