Strong March Sees Weak Chrysler Sales

By Brendan Moore

Sales in the United States auto market are expected to jump this month, with preliminary reports showing large increases due to a combination of incentives from all the major automakers (led by Toyota) and the recovering national economy.

Toyota has rolled out huge incentives in the form of low-interest and zero-interest loans, as well as subvented leases, in order to reverse the sales slide resulting from their particular hell of vehicle recalls, and the other automakers have rushed to respond, so as to remain competitive in the market. Consumers have responded en masse, and sales numbers for the month look very rosy so far.

But Chrysler is trending down 10% month-to-date from last year’s decidedly dismal results. Chrysler’s Fred Diaz, the company’s U.S. sales head, says not to worry.

Diaz says retail sales have actually increased 50% over last month, which is a good sign. Perhaps, but since Chrysler only sold 84,449 vehicles in total last month, and a large percentage of those sales were fleet sales, it is a 50% increase of a very small number. That small number was 35,832 – that’s how many retail sales Chrysler did out of the total 84,449 unit sales in February. The rest were fleet sales.

Diaz stated to reporters, “Consumer confidence in our company is starting to grow. People are starting to realize we are here to stay and we will continue as a corporation.”

The Chrysler executive said it is misleading to compare last year’s March results to this year’s, since sales last year were purposefully fueled by huge cash rebates prior to Chrysler declaring bankruptcy.

“Basically, we were operating as a supply-based company rather than a demand-based company, with heavy rebates and incentives. We are not doing that anymore,” Diaz said.

Well, part of that is true. Chrysler has cut back on the incentives. But some history might be illuminating.

Last year was a bad year for everyone; sales fell 21% across the auto industry. But, Chrysler’s sales fell even farther, dropping a dizzying 36%. And while just about everyone else has been posting huge gains so far in 2010, Chrysler is performing miserably, and there is not much potential good news on the horizon.

Chrysler did not introduce a single new car last year, and will not introduce any new cars until the end of this year. Many of the existing car models in their lineup have been deserted by consumers. The company is on a crash course to refresh both their cars and trucks this year, but it remains to be seen if consumers will respond to a massage of a nameplate that is performing poorly currently. Chrysler says 75% of its current cars and trucks will be refreshed by the end of this year, and publicly states that this should reverse their sales slide, but it is a big hill to climb.

The Fiat 500, provided by Chrysler’s Italian master, is scheduled to be sold out of Chrysler showrooms by late fall, and that will provide some sales revenue, but it will retain its Fiat badge, and not be sold as a Chrysler.

On a related note, Chrysler has announced that the first big advertising and marketing campaign aimed at separating “Dodge” from “Ram” in terms of their truck line will kick off this month. The Ram truck brand is going to be born right before our heavy-lidded eyes.

And without saying exactly what the big differences are between the Dodge truck brand and the Ram truck brand, the aforementioned Mr. Diaz had this to say: “The reasoning behind the separation between the Ram and Dodge brands is starting to resonate. There’s a distinct separation between what Dodge means and what Ram means.”

Hmmm.

The first Ram will be the 2010 Ram Heavy Duty Pickup, Motor Trend magazine’s Truck of the Year, an anointing that will figure heavily in the ads Chrysler runs for the truck. Look for a review of the 2010 Ram Heavy Duty on Autosavant in the coming weeks.

Sam Elliot, the craggy actor best known for the slow, drawling bass voice he employs while playing cowboy parts, will be featured in the television commercials for the Ram truck. Of course, Mr. Elliot doesn’t just play cowboys – he recently had a small part as a pilot in the George Clooney film “Up In The Air”, and, also appeared more or less as a parody (or perhaps it was an homage) of his typical role in the cult film “The Big Lebowski” way back when. Yes, the Dude abides.

Diaz commented that Chrysler would rather spend a lot of money on advertising than on sales incentives, and that this is merely the first step in the long process of making consumers think of Chrysler as something other than a low-end automaker that has to offer customers money to buy their chronically-distressed goods. He opined that Chrysler is going to accomplish that goal over the next several years.

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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