Dealers: Chrysler built wrong vehicles
 | The Chrysler group says it has built too many vehicles. Dealers say vehicles such as a base 2006 Dodge Grand Caravan are tough to sell. A 2006 model is shown. | |
'Weirdly packaged minivans' and others sit unsold on 6 lots
Bradford Wernle | | Automotive News / November 27, 2006 - 1:00 am Dealer Thomas Vann has been sitting on 13 Chrysler Town & Country and Dodge Grand Caravan long-wheelbase minivans since June, when he bought them from Chrysler's sales bank.
Vann, owner of Team Hillsdale Chrysler-Dodge-Jeep in Hillsdale, Mich., says he can't get rid of the vehicles. As with other sales bank vehicles, Chrysler built the base-level minivans with no dealer orders, then shipped them to holding lots and sought dealers to buy them.
Vann describes the vehicles as "weirdly packaged minivans."
"There are no (lease deals), no keyless entry, no key fob, no power front chair," he says. "People say, 'I don't want that. I'd rather get the megapackage.' It's just a queer package and no great program."
Queer, indeed. Vann says a 2006 Dodge Grand Caravan SE base model leases for about $6 more a month than a fully loaded 2007 Grand Caravan SXT. Unlike the base model, the 2007 SXT comes with power sliding doors, triple-zone temperature control, keyless entry, power driver's seat and aluminum wheels.
"What would you rather do, get more equipment for less money?" Vann asks.
Many Chrysler group dealers say they face similar problems. Chrysler has acknowledged that it built too many vehicles. But many dealers say Chrysler compounded the problem by building the wrong vehicles, contributing to the automaker's $1.5 billion third-quarter loss.
| Mixed-up mix Packages that leave customers cold and drive dealers nuts
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Muddled mix
Dealers say Chrysler got the inventory mix wrong in 2006. They acknowledge the market was especially hard to predict with fluctuations in gasoline prices. But they blame the company for ignoring their recommendations and for weak incentive programs.
One New York area dealer who declined to be identified said: "They had trucks misordered with every mismatched combination and permutation you can make."
The new Chrysler Aspen SUV has been a particular problem, he says.
"You get a loaded-up Aspen for $44,000 with everything but navigation," he says, adding that people who pay that much expect a navigation system.
Kingsport, Tenn., Dodge dealer Doug Alley has been sitting on a base-level Dodge Ram 1500 ST since June, when he bought it from the sales bank. With a sticker price of $28,405, the truck has options including a cloth interior, a split folding rear seat, an anti-spin differential and cruise control.
Alley also has a Ram 1500 SLT, the upscale model, with a sticker price of $30,750. The SLT comes with all the features of the ST, plus an upgraded interior, power windows, power door locks and alloy wheels. Both trucks have a $5,500 rebate.
The price differential is so small, "the loaded ST is just not sellable," says Alley, who says half his business at Alley Dodge is Ram trucks.
"A working guy doesn't care about the cloth split bench seat or the anti-spin. If I was ordering the ST, I'd be ordering it with no options."
Without the options, it would cost about $1,500 less, a real difference to Alley's payment-conscious customers. "That example applies to a lot of stuff they do," says Alley.
Counting on dealers
Chrysler spokesman Kevin McCormick said: "While there may be vehicles out there with less than perfect configuration, our dealers are great people, and we do believe they can find the right customers for those vehicles."
McCormick said Chrysler had 508,724 vehicles in dealer inventory (an 80-day supply) at the end of October. The mix was 55 percent 2007 models and 45 percent 2006s, he said. The company wants to have no more than 500,000 by year end.
The inventory levels are lower this year than they have been in previous years because Chrysler slashed production about 21 percent in the third quarter. On Nov. 1, 2005, Chrysler dealers had 602,500 vehicles, or a 95-day supply.
Jeremy Anwyl, president of the industry research firm Edmunds.com, said strange mixes on dealer lots late in the product cycle are normal because the most desirable cars sell quickly.
But, Anwyl adds, "I think the situation would be aggravated for any manufacturer that banked unsold cars."
One reason oddly equipped vehicles are built is that automakers make commitments to suppliers to purchase certain quantities of components they think they need to use, he adds.
Sid DeBoer, chairman of public dealership group Lithia Inc., of Medford, Ore., said the configuration of cars in Chrysler's sales bank has "markedly improved" compared with a year ago.
Chrysler's recent change from monthly to weekly allocations has helped, he said.
"Weekly is just a tremendous improvement," he said, praising Chrysler's sales team. But, DeBoer adds, "I'd love to see them develop a system where they would stop the sales bank and not build a car without a dealer order."
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