Chrysler attacks inventories

Bradford Wernle, Automotive News, AUBURN HILLS MI - - After nearly two months of an employee pricing incentive, the Chrysler group's swollen inventories still exceed the industry average by more than a month.

So Chrysler is offering dealers aggressive financing assistance to help them get rid of their oldest vehicles and to get them to buy more 2006 cars and trucks.

For every vehicle the dealer is carrying over 80 days' supply, Chrysler is offering dealers $150 to $250 per vehicle in monthly floorplan assistance, roughly the average financing cost with a normal 9 percent loan.

Last week, Chrysler added a $1,000 bonus for some models that have been languishing on their lots since March 31, if sold by Thursday, Aug. 31.

Vehicles covered are the Chrysler 300C; Jeep Commander and Grand Cherokee; and Dodge Ram, Durango and Magnum RT. In addition, dealers will get $750 for selling a minivan that has been sitting for the same period.

Dealers welcome the cash and say it shows that Chrysler may be turning away from forcing dealers to take vehicles they don't want.

"For the factory to say, 'If you happen to over-order, we're going to cover it for you,' I think it's a huge shot in the arm for small to mid-size dealers with too much inventory," said Cass Burch, owner of Cass Burch Chrysler-Dodge-Jeep in Quitman, Ga.

Dealers had criticized Chrysler this summer for forcing them to take vehicles they did not want by threatening to withhold more desirable vehicles.

Chrysler has a flood of all-new 2007 products arriving in dealerships, including the Chrysler Sebring and Aspen, Jeep Compass and Patriot, redesigned Jeep Wrangler and Dodge Nitro.

Last week, Chrysler CEO Tom LaSorda said Chrysler will cut production of Dodge Durango SUVs and Ram pickups in the fourth quarter. Chrysler already had trimmed between 65,000 and 75,000 units during the third quarter.

Chrysler vehicles that sold from Aug. 1 to Aug. 20 had sat on dealer lots an average of 90 days, according to the Power Information Network.

"Their average is almost a month above the industry," said Tom Libby, Power analyst.

Dealers are eager for a new incentive that will increase floor traffic.

"We're satisfied with the employee pricing," said John Schenden, owner of Pro Chrysler-Jeep in Denver.

"They said it will end on Aug. 31. It will. New incentives start on Sept. 1."

Chrysler and the dealers decline to specify what those incentives will be.