Variance

Chryslers pile up

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Variance    0

Chryslers pile up

Company pushes excess cars on wary dealers

Brett Clanton and Josee Valcourt / The Detroit News

DETROIT -- You may have seen them and thought little about them.

But those huge parking areas throughout Metro Detroit filled with row after row of brand-new Chryslers, Dodges and Jeeps have become a source of friction between DaimlerChrysler AG's Chrysler Group and some of its dealers -- and a symbol of just how hard the automaker is pushing to maintain its sales momentum.

In lots at Detroit Metro Airport, the Michigan State Fairgrounds, the Pontiac Silverdome and other locations, Chrysler has stockpiled new vehicles -- many of them loaded with expensive options -- that haven't been ordered by dealers.

In recent weeks, the automaker has been pressuring dealers to accept extra vehicles from the so-called "sales bank." Chrysler will not disclose how many vehicles it has deposited in the bank.

"These are cars that are already built but they don't have a home for," said Jonathan Grant, managing partner of Chrysler-Jeep dealerships in Yonkers and White Plains, N.Y. "So they try to shove them down dealers' throats."

Anxious to keep its turnaround on track, Chrysler is telling dealers bluntly to work through the inventory and says it won't consider production cuts as a counter measure.

Chrysler and other automakers record sales and revenues after vehicles are shipped to dealers rather than when they are purchased by a customer. So it's not uncommon for car companies to push dealers to order vehicles and for dealers to push back out of fear of being stuck with costly excess inventory.

But many Chrysler dealers said the recent pressure to order new cars and trucks from factories and the sales bank is far beyond the norm.

Chrysler has gained market share in the United States in each of the past two years while General Motors Corp. and Ford Motor Co. have lost ground.

Chrysler maintains that most of its dealers support an aggressive sales strategy. The automaker already offers more sales incentives per vehicle than any other automaker.

In February, Chrysler spent an average of $3,167 per vehicle to woo buyers, while Ford shelled out $2,778 per vehicle and GM paid $2,540 per vehicle, according to Edmunds.com. Last week, Chrysler extended a zero-percent financing offer for 60 months through the end of March on select models.

In addition, Chrysler has been offering dealers an extra $1,000 for every extra car and truck they order. The offer, which expires at the end of March, helped Chrysler lower its inventory at the end of February to about 550,000 vehicles, which equates to a 67-day supply. It had 85 days' worth a year ago. By contrast, GM ended last month with an 89-day supply and Ford wound up with a 76-day supply.

Chrysler hails the incentive program -- in which 80 percent of its 4,000 dealers participate -- as an example of the cooperation it receives from dealers when the going gets tough. But some dealers say they didn't have much of a choice in participating in the "optional" program.

Grant said his partner in the White Plains store initially balked at accepting extra vehicles, but Chrysler pushed him to change his mind.

"He got at least 10 phone calls or visits from Chrysler personnel," Grant said. "There was relentless subtle pressure on the White Plains store."

For Grant and other dealers, the $1,000 spiff makes it worth it to order extra vehicles in the short term. Yet some Chrysler dealers worry that the automaker is so focused on its sales reports and balance sheets that it has started making business decisions that could jeopardize its winning streak.

Chiefly, they point to Chrysler's penchant to stockpile inventory rather than cut factory production, and to crank out high-end vehicles that are difficult to sell.

GM and Ford disclosed plans last week to cut production in the face of falling sales. Chrysler executives said they considered slowing down factories when inventories ballooned early this year. But last month at a private meeting of Chrysler dealers at the National Automobile Dealers Association in Orlando, Fla., the automaker told dealers to "sell through" the inventory issues, said Kevin McCormick, a Chrysler spokesman who attended the meeting.

"Production cuts were never talked about," he said. "They were not put on the table as an option."

Many dealers at the NADA meeting sounded off about the pressure to accept vehicles from the sales bank. While some industry observers have begun to question the sustainability of Chrysler's turnaround, Joseph Barker at CSM Worldwide Inc. in Farmington Hills said the automaker should continue to increase sales and U.S. market share this year.

"We're expecting them to do pretty well, even with growing pressure from Japanese and Korean automakers," he said.

Dan Frost, president of Southfield Chrysler-Jeep, estimates he pays $80 per vehicle each month in interest and insurance. So, when he agreed to accept 1,200 surplus vehicles last month, he admits it was an expensive gamble. "It's enormous pressure," he said.

But the risk paid off for Frost and many other Chrysler dealers, who benefited from the automaker's increased sales in January and February.

Some dealers are happy to have bulging lots heading into the busy spring selling season.

"This time of year, I'll take it," said Alan Helfman, owner of a large Chrysler-Jeep dealership in Houston, who estimates he ordered 100 more vehicles than he usually does in February. "You can really knock it out."

Chrysler's strategy of cranking out vehicles and then doing whatever it takes to sell them may not be the ideal scenario, but it's producing results, said John Schenden, past chairman of the Chrysler-Jeep dealer council.

As for those dealers who complain about being pressured to accept more vehicles, he said it's impossible to please everyone.

"There are a group of dealers out there," he said, "who would complain if you gave them two weeks in Hawaii -- and then it rained two days."

Link: http://www.detnews.com/apps/pbcs.dll/artic.../603050333/1148

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regfootball    234

just drove through the dodge dealer tonight. NO CARAVANS but they were absolutely bursting with tons of Magnums and Chargers. Had to have been at least 40 of them. Almost no rams and a couple stratus. insane.

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VenSeattle    8

(Chrysler) already offers more sales incentives per vehicle than any other automaker.

In February, Chrysler spent an average of $3,167 per vehicle to woo buyers, while Ford shelled out $2,778 per vehicle and GM paid $2,540 per vehicle, according to Edmunds.com. Last week, Chrysler extended a zero-percent financing offer for 60 months through the end of March on select models.

That quote alone made GM's MSRP adjustment worth every cent. Hopefully this is a start of GM no longer looking as consistently desperate as the media has painted in the past.

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ponchoman49    23

Other than the Caravan, the odd Jeep or the 300C there is little at Chrysler that interests me. But with so many Sport utes, upcoming crossovers and trucks it's no wonder that our active lifestyle generation are flocking to these vehicles. It's really sad to see them getting out of the coupes and sub compact sedan market but the Challenger does look promising.

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blair1118    0

I sat in a Charger for the first time a few weeks ago and I was sorely disappointed, the outside is awesome but the inside, I didnt even touch any of the surfaces cause they just looked so cheap and aweful

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regfootball    234

I sat in a Charger for the first time a few weeks ago and I was sorely disappointed, the outside is awesome but the inside, I didnt even touch any of the surfaces cause they just looked so cheap and aweful

exactly. on the mid forties priced SRT version, its extremely awful considering price. No way the press would let GM get away with that sparse an interior.

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BrewSwillis    0

I sat in a Charger for the first time a few weeks ago and I was sorely disappointed, the outside is awesome but the inside, I didnt even touch any of the surfaces cause they just looked so cheap and aweful

Wow, that's pretty weak. You should have just gone ahead and touched them. You would have found out that pretty much everything above the knees is made of a soft touch rubbery material, and that it's pretty solid.

But, I guess it was just much easier to come on a message board and complain instead of just touching a dash of a car that you were actually sitting in? :rolleyes:

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mrmonte    0

They still wont make any deals on the V8 LX cars so I guess the're still selling a lot of them.

Edited by mrmonte

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haypops    0

I have had expereince with three chrysler corporation cars in recent years (6 cyl 300, PT cruiser, and Sebring) and their just not competative with GM. Internal meetings at Chryusler have been stormy this last month.

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Wow, that's pretty weak.  You should have just gone ahead and touched them.  You would have found out that pretty much everything above the knees is made of a soft touch rubbery material, and that it's pretty solid.

But, I guess it was just much easier to come on a message board and complain instead of just touching a dash of a car that you were actually sitting in? :rolleyes:

I love soft rubbery stuff...I feels so nice in my breeze...almost gives a leather effect :thumbsup:

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njtex    0

Chrysler's gone full circle in 2.5 years instead of the usual 7 years. I think this is a new record!

Lame joking aside, the majority of their products are compelling so I think they can recover quickly if they just back-off on the production throttle a bit where needed. It would be a shame if they devalue their brand and their new credibility in an attempt to reach some artificial volume target. This is especially critical considering that Jeep and MB are not in the position right now to cover any losses on the Chrysler side.

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this is no different than any other manufacturer. Look at GM, there are close to a thousand H1, H2 and H3's being shuffled around southern California weekly because GM planned to shove them down the throats of their dealers. They don't sell well so they keep building???

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Yeah... not-so-hot-anymore-but-still profitable RWD cars are still tons better than gaping hole in the GM lineup that the now-6-years-absent B-body left.

Edited by Sixty8panther

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Yeah... not-so-hot-anymore-but-still profitable RWD cars are still tons better than gaping hole in the GM lineup that the now-6-years-absent B-body left.

Hmmm..6-years?? The B-body has been gone almost 10 now... ('96 was the last model year of the B-body).

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The O.C.    2

I see more and more LX cars every day......including the slower-selling (relatively-speaking) Magnums. Chargers are everywhere. 300s still are.

Chrysler is dumping LX cars on the dealers, but the cars are still selling well and SRT-8s are still getting over MSRP. Those cars won't be a problem, even with the overly strong production.

In talking to my dealer the other day (while my Liberty was getting serviced) I see the problem as being the "cloud" cars, which are due to be replaced soon, and the Grand Cherokee and Commander. Liberty still seems to be doing "okay." GC and Commander are doing WAY below expectations. Dakota isn't doing as well, either, but Ram is still okay.

PT Cruiser is still a great car and great value, even on the old Neon platform. No news yet on Caliber as my dealer hadn't rec'd any when I was talking to him.

What are you guys seeing at dealers in your part of the country?

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I see more and more LX cars every day......including the slower-selling (relatively-speaking) Magnums.  Chargers are everywhere.  300s still are.

Chrysler is dumping LX cars on the dealers, but the cars are still selling well and SRT-8s are still getting over MSRP.  Those cars won't be a problem, even with the overly strong production.

In talking to my dealer the other day (while my Liberty was getting serviced) I see the problem as being the "cloud" cars, which are due to be replaced soon, and the Grand Cherokee and Commander.  Liberty still seems to be doing "okay."  GC and Commander are doing WAY below expectations.  Dakota isn't doing as well, either, but Ram is still okay.

PT Cruiser is still a great car and great value, even on the old Neon platform.  No news yet on Caliber as my dealer hadn't rec'd any when I was talking to him.

What are you guys seeing at dealers in your part of the country?

I see very, very few Chargers and Magnums around here...loads of 300s, though, and tons of Jeeps (domestic SUVs seem to sell much better than domestic sedans in the Denver metro area).

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CARBIZ    1

A customer told me last week (who lives in Oshawa) that GM is piling up cars at Mosport race track. Hmm. I wonder if there is any connection to the upcoming Delphi deadline? I mean, if there is a strike or a lock out, both GM and Ford are going to be hurting for parts, right? Wouldn't it make sense to start stockpiling vehicles now?

Just wondering.

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BrewSwillis    0

I know they are piling up Jeeps in a bunch of lots in Toledo, but I'm guessing it's because they are about to retool and do change over for the new Wrangler, and then very soon after the new Liberty and Nitro.

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Intrepidation    846

Hwn I was down in Wichita, KS I saw a tone of Chargers and Magnums, and a good amount of 300's. Up here in Massachusetts I see more 300's than anything else, though I see quite a few Magnums and I'm seeing more and more Chargers. They seem to be selling well. I hardly ever see a new Dakota, only about 15 since they came out... There's a Caliber at my local dealership, I would go look at one...but today my car got into an accident :(

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