Chrysler going big on incentive spending

[MrFatbooty]

Chrysler is offering unprecedented cash bonuses worth hundreds of millions of dollars to its 3,400 dealers in an all-out effort to sell 2006 models and finish the year on a high note. Beginning today, the Auburn Hills-based division of DaimlerChrysler AG is giving dealers up to $7,000 per vehicle in "dealer cash," which is money dealers can pass on to consumers or keep as profit. All totaled, Chrysler is offering roughly $500 million in dealer cash on 164,000 remaining 2006 cars and trucks. The company, however, doesn't expect to sell all of its remaining 2006 models in December. "They are huge, huge dealer cash amounts," Mike Manley, Chrysler's head of sales strategy and dealer operations, told district managers Friday in a conference call. "It's the biggest move we've ever made." The massive dealer cash program, which Chrysler will not advertise, coincides with a new round of traditional rebates on 2007 models, which also take effect today. The deals should help ease tensions between Chrysler and its dealers, some of whom have complained they are being pressured to order cars they can't sell. Consumers could be the biggest winners. The dealer cash will allow dealers to pile discounts on top of existing rebates, creating huge savings for buyers. "The customer benefits either way because the dealer will probably share most if not all of their cash with the consumer," said John Berry, a Chrysler sales manager at a Florida dealership. $2,500 to $7,000 for dealers The dealer cash ranges from $2,500 on models such as the Dodge Charger and Chrysler 300 sedan to $7,000 on the Dodge Ram pickup and Durango SUV. "We want to be aggressive with dealer cash on 2006 models and customer cash on 2007 models to close out the year in an uptempo fashion," said Chrysler spokesman Kevin McCormick, who declined to provide specifics. Chrysler stumbled this year after miscalculating its U.S. sales and overbuilding cars and trucks. Since summer, the automaker has launched aggressive incentives programs in hopes of drawing more consumers to showrooms and tried to court dealers with bonus cash to order more vehicles to help deplete the company's swollen inventory. Some dealers, swamped with too many vehicles, have balked at ordering more. Chrysler is hoping its latest push will spur them to order and sell more vehicles. The carmaker needs to clear out 2006 models to ramp up sales of 2007 models. The automaker is in the midst of launching a record 10 models for the year. Although Chrysler has reduced its inventories from a high of 647,000 vehicles in July to 499,000 in November, 2006 models still account for 32 percent of its inventory. "To have a third of your inventory in old models when you're two months into the (2007) model year, that's heavy," said auto analyst John Casesa of Casesa Shapiro LLC. "It should certainly be lower." 'No alternative' to clear stock Jesse Toprak, an analyst with Edmunds.com, a Web site that tracks sales incentives, said Chrysler must put the 2006 model year in its rearview mirror. "Chrysler has no alternative but to clear out this existing inventory," Toprak said. The dealer cash offers, which Toprak called "quite high," should help dealers move 2006 models. Toprak said Chrysler, Jeep and Dodge dealers typically pass most dealer cash on to customers. "If you have $1,000 in dealer cash, Chrysler on average will pass 85 percent of that amount to consumers," he said. Ken Zangara, a Dodge dealer in Albuquerque, N.M., said the dealer cash will make a big difference for him. "I guarantee that I will sell all of (his 2006 models) in 30 days." Chrysler also recently launched an aggressive direct mail campaign, offering $1,000 coupons to 3.4 million customers in the market for a new car. Dealers have been asked to contact the potential buyers before the deal ends on Jan. 2 on certain 2006 and 2007 model-year vehicles. In addition, Chrysler will tweak its lease and employee pricing programs in leasing markets and states where there is a high concentration of Chrysler employees to move 2007 vehicles. For example, employees can now apply the company's discount program to models previously excluded from the deal such as the Dodge Magnum SRT-8. The redesigned two-door Jeep Wrangler, Chrysler Aspen SUV and Dodge Nitro -- all new vehicles -- have been added to the mix. http://www.detnews.com/apps/pbcs.dll...20/1148/AUTO01

Registered and logged-in users don't see this ad! Register your free account today.