Chrysler: 50,000 cars uncounted

Total number could be worth $1.2 billion; automaker expects all to be gone by year's end.

Nick Bunkley / New York Times |AUBURN HILLS -- The Chrysler Group said Monday that it had not yet accounted for tens of thousands of cars in its inventory numbers, which are already considered high by industry standards.

Chrysler said it had routinely excluded these vehicles, worth billions of dollars, from its tally of unsold vehicles because they had not yet been assigned to a specific dealer or ordered by a customer.

While there are no requirements for how automakers report their inventories, the disclosure has frustrated competitors who say they are being more forthright about their struggles. Chrysler says the practice is common, but other automakers say they abandoned it decades ago, after the oil shortages of the 1970s caused inventories to bloat quickly.

A Chrysler spokesman, Kevin McCormick, said about 50,000 vehicles were currently unassigned and therefore not included in Chrysler's inventory figures, adding that the number had been as high as 100,000 this summer.

At an average price of $25,000 each, those 100,000 vehicles would be worth $2.5 billion. By year's end, McCormick said, all of the company's unassigned inventory will be gone. "We're actively working with our dealer body to reduce that," he said. "It's a number that's higher than what we would like for it to be."

The situation was first reported Monday by Ward's Automotive Reports. But it had been no secret this year that Chrysler was overloaded with unsold vehicles.

Flights going into and out of Detroit Metropolitan Airport pass over expansive mosaics of shiny Chrysler, Dodge and Jeep vehicles produced months ago and deposited in parking lots that would otherwise be vacant. Vehicles have also accumulated on lots near Jeep plants in Toledo, Ohio.

Officially, Chrysler, a division of DaimlerChrysler, reported that it had an 82-day supply of vehicles in inventory at the end of September, amounting to 86,400 passenger cars and 447,000 light trucks.

An additional 50,000 vehicles would bring supplies to about 90 days' worth.

"That means they've overstated the level of demand for their vehicles," said George Pipas, the chief sales analyst for Ford Motor Co. "The practice that Chrysler has engaged in over the last two years is something this industry did 25 years ago. It's a practice that we have not engaged in since then."