January 4, 2007
Chrysler throws in free Hemi
Automaker hopes deals on popular $1,700 engines, $1,000 DVD systems will spark rebound after a tough 2006.
Want a Hemi? You can get one at no extra charge later this year.
DaimlerChrysler AG's Chrysler Group plans to launch a first-ever national marketing campaign in March that will let consumers buy a Chrysler, Dodge or Jeep truck equipped with a powerful eight-cylinder Hemi for no additional charge. The popular engine typically costs an extra $1,700. Then in April, Chrysler will offer DVD entertainment systems valued at nearly $1,000 for no additional fee on every minivan it sells, George Murphy, Chrysler's vice president of marketing, told dealers in a Web cast Wednesday.
“It's something that GM and Ford don't have,” Murphy told dealers. “It's going to be a conquest program for us.”
Chrysler representatives would not provide additional details on the offers.
“We don't discuss these issues between our dealers and us,” said Chrysler spokesman Markus Mainka. “But our general marketing approach is that we focus on key vehicles, highlighting their product features and benefits.”
The company also told dealers it is launching a new incentive program for January that includes low-rate financing on high-volume products such as the Dodge Ram pickup and minivans. The program also includes up to $5,000 consumer cash on select 2007 models, including the Chrysler 300C and Dodge Charger. The new campaign is tagged “America's Hottest Product.”
“I think it's going to be a most exciting year for us,” Murphy said. “We don't have that monkey on our back of this big wholesale challenge so we can get focused and put all our energy into retail.”
Chrysler is trying to get off to a fast sales start after a difficult 2006. The automaker's inventory was bloated for much of last year, which led the automaker to drastically cut vehicle production in the second half of 2006.
Chrysler riled dealers by pushing them to take cars and trucks they feared they couldn't sell. The controversy was a factor in the resignation last month of sales and marketing chief Joe Eberhardt.
In a move to rebuild rocky relations with dealers, executives plan to meet with Chrysler's dealer council next week in Auburn Hills to discuss retailers' top 10 concerns, Steve Landry, Chrysler's vice president of sales, said on the Web cast.
“We are going to eradicate each of those (concerns) so we can put our relationship back on track,” Landry told dealers.
And Chrysler CEO Tom LaSorda is planning a road trip to meet with dealers nationwide in March and April.
Some dealers remain skeptical about Chrysler plans, particularly the Hemi deal.
“It won't fly unless they make adjustments on other cars that don't have Hemis,” said Dan Frost, who owns several dealerships in Metro Detroit, including a Chrysler Jeep store in Southfield.
It's likely that Chrysler will present the marketing plan to its dealer council later this month to get retailers' input, Frost said.
Jim Sanfilippo, an auto analyst with Automotive Marketing Consultants Inc., called the planned campaign “different forms of incentives” but “sound thinking” because it gets certain vehicles on consumers' consideration list.
“It's probably less expensive for Chrysler to do it this way than offer some giant rebate that nobody notices,” he said. The risk is the Hemi's value diminishes and “everybody waits until the next sale to buy them,” he said.
The moves come as Chrysler is trying rebound after losing $1.5 billion in the third quarter last year and projecting a $1.2 billion full-year loss for 2006 stemming from lackluster sales.
Murphy told dealers the Auburn Hills automaker would take a more strategic approach to launching marketing programs and “periodically during the year, when it makes sense, bang hard on national sales events.”
Separately, during its monthly sales conference call with media, Chrysler reported a 0.5 percent gain in December sales compared to a year ago and said it had reduced its sales bank — vehicles that are not built to meet dealer orders — to below 10,000 units, down from about 140,000.
“Our dealers are facing a brutally competitive marketplace and our goal as a manufacturer as part of that relationship is to provide them with the great products to sell and, as importantly, the tools to sell those products efficiently,” Mike Manley, Chrysler's vice president for sales strategy and dealer operations, said during the sales call.
