Chrysler Considers More Cuts in Production
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| AutoWeek | Published 08/21/06, 8:21 am et - - |
Chrysler may cut production of some 2007 vehicles if previously announced cutbacks don't make a sufficient dent in the company's bloated inventories.
In a July sales call to analysts, Chrysler CEO Tom LaSorda said the company was taking a series of actions to trim production by 50,000 to 65,000 units. Now COO Eric Ridenour says Chrysler could cut production further, primarily 2007 models.
Ridenour said Chrysler is sticking with the plan announced by LaSorda but will monitor the success of its sales programs closely.
"We have cuts coming throughout the third quarter," Ridenour said at the introduction of the redesigned 2007 Jeep Wrangler here. "Clearly our intent is to help correct the inventory. We have a pretty aggressive plan."
Ridenour said he thinks the actions Chrysler has taken are sufficient. If not, the company will make further cuts, he said.
"I'm not expecting there to be further cutbacks, but it depends on how good sales are," Ridenour said.
In July, Chrysler trimmed inventory with plant shutdowns.
As of Aug. 1, dealers were holding 560,200 vehicles, the highest July inventories in five years. That translated to a 93-day supply. Of the vehicles in inventory, 436,400 were trucks.
The Dodge Durango SUV tops the Chrysler group's days-supply list. Dealers had a 204-day supply as of Aug. 1, with 27,300 units of inventory.
Supplies of the Jeep Commander (127 days), Dodge Magnum (147 days) and Dodge Dakota (113 days) also were high.
Catherine Madden, production forecaster for Global Insight in Lexington, Mass., predicts Chrysler group production will decline 2.8 percent in the second half of 2006 compared with the first half.
"The pace of assembly in the first half of the year is unsustainable without ballooning inventories further," she says. "They need to move it (the inventories). They're launching several significant products over the next couple of months. Unfortunately, they are still under the gun of heavier incentives."
In a July sales call to analysts, Chrysler CEO Tom LaSorda said the company was taking a series of actions to trim production by 50,000 to 65,000 units. Now COO Eric Ridenour says Chrysler could cut production further, primarily 2007 models.
Ridenour said Chrysler is sticking with the plan announced by LaSorda but will monitor the success of its sales programs closely.
"We have cuts coming throughout the third quarter," Ridenour said at the introduction of the redesigned 2007 Jeep Wrangler here. "Clearly our intent is to help correct the inventory. We have a pretty aggressive plan."
Ridenour said he thinks the actions Chrysler has taken are sufficient. If not, the company will make further cuts, he said.
"I'm not expecting there to be further cutbacks, but it depends on how good sales are," Ridenour said.
In July, Chrysler trimmed inventory with plant shutdowns.
As of Aug. 1, dealers were holding 560,200 vehicles, the highest July inventories in five years. That translated to a 93-day supply. Of the vehicles in inventory, 436,400 were trucks.
The Dodge Durango SUV tops the Chrysler group's days-supply list. Dealers had a 204-day supply as of Aug. 1, with 27,300 units of inventory.
Supplies of the Jeep Commander (127 days), Dodge Magnum (147 days) and Dodge Dakota (113 days) also were high.
Catherine Madden, production forecaster for Global Insight in Lexington, Mass., predicts Chrysler group production will decline 2.8 percent in the second half of 2006 compared with the first half.
"The pace of assembly in the first half of the year is unsustainable without ballooning inventories further," she says. "They need to move it (the inventories). They're launching several significant products over the next couple of months. Unfortunately, they are still under the gun of heavier incentives."
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