Wednesday, June 29, 2005

Chrysler may match GM deals

Success of program that gives employee discounts to all could prompt rebate war.



By Brett Clanton / The Detroit News

Chrysler is prepared to match General Motors Corp.'s nationwide employee-pricing program if the No. 1 automaker extends the successful sales promotion past July 5.

The DaimlerChrysler AG unit on Tuesday told its national dealer council it could implement an employee-pricing program as early as July 6, but would not make a final decision until it determines whether GM will extend its promotion through July, according to sources familiar with the matter.

Chrysler officials would not discuss the dealer meeting, but acknowledged that a special program is needed to make the automaker appear more competitive in the marketplace and counter GM's program, which offers all customers the same discount available to its employees.

"I can tell you that we're looking at everything right now," Chrysler spokesman Jason Vines said. "You've got to give it to GM because they repackaged what they already had and cut through the clutter."

The employee-pricing program has boosted GM's showroom traffic, with some analysts estimating the automaker's June sales will rise 30 percent over June 2004 and that the company's share of the U.S. auto market could rise to 30 percent.

Driven by the GM deals, overall industry new car and truck demand is expected to reach an annualized rate of nearly 18 million units in June. Major automakers report June sales on Friday.

GM's market share has slumped to 25.4 percent this year, producing deep financial losses and forcing the automaker to become more aggressive in the marketplace.

The automaker launched the employee-pricing program in an attempt to clear 1.2 million unsold 2005 vehicles from dealer lots before 2006 models arrive this fall and to win over customers from other vehicle brands.

Under the program, GM allows customers to pay what GM employees pay, which is about 3 to 4 percent below dealer invoice.

Earlier this month, Chrysler launched a national print, TV and online advertising campaign called "Straight Math, Great Product" to show that its rebate programs were competitive with those of rivals, including GM.

Chrysler and Ford have also sent missives to dealers advising them on how to counterbalance the buzz GM's deal is creating in the marketplace.

But Chrysler's meeting Tuesday with dealers suggests those efforts have not been successful and that the nation's No. 3 automaker needs more ammunition to fight back.

"Chrysler's taking a look at various options that we have," said John Schenden, a Chrysler dealer in Denver, Colo., and head of the national Chrysler Jeep dealer council. "Our existing programs will run through July 5, and we're looking to be as competitive as we can on July 6."

When asked if there was a proposal on the table for an expanded Chrysler employee-pricing program, he said: "We're batting around a lot of things."

Chrysler is likely to feel more pressure to launch a rival promotion if GM decides to extend its employee-pricing program into July.

Mark LaNeve, GM's North America sales and marketing chief, said the company is considering a continuation of the program into next month and will make a decision based on inventories once the program ends.

The GM program, which runs June 1 to July 5, may help the world's largest automaker turn in "the highest unit level since October 2001," Merrill Lynch analyst John Casesa said in a note to investors Friday.

GM's top sales analyst, Paul Ballew, said this week the promotion could also lead GM to an all-time monthly record for truck sales.

While overall industry sales are down 1 percent, Chrysler's 2005 sales are up 4.4 percent and its U.S. market share has reached 14 percent, according to Autodata Corp.

But GM's latest program could draw buyers when Chrysler is banking on ending the year with bigger sales and market share gains with new vehicles such as the 2006 Dodge Charger sedan and the upcoming Jeep Commander SUV.

Typical flavor-of-the-month rebate programs may not be enough to give Chrysler the boost it needs and don't give the same punch as the GM program.

"Everybody knows about it," said Dan Frost, president of Southfield Chrysler Jeep, referring to the GM employee-pricing program. "I don't see how Chrysler and Ford cannot do it because of the simplicity of it."

Dan Bedore, a Ford Motor Co. spokesman, said Ford is closely watching the GM program but believes its incentive offerings are competitive.

"We are going to have the right balance of incentives and appealing products," he said. "It's our position right now that our employee discount is for employees."

The GM promotion has drawn criticism from some of the automaker's dealers, who complain it limits their ability to negotiate more profitable deals with customers. And some contend that GM may be siphoning sales from upcoming months. Chrysler dealers have similar concerns.

"As a dealer, I'd rather have the rebates and let me play with the money myself," said Dick Withnell, a Dodge dealer in Salem, Ore.

Gary Dilts, Chrysler's vice president of sales, said recently that he would put the automaker's incentive programs against anybody. When asked in a conference call with reporters and analysts earlier this month if Chrysler would have to match GM's program, Dilts struck a defiant tone. "Bring it on," he said.

Whatever Chrysler decides, Schenden feels confident the automaker will arm dealers with the right incentives this summer.

"They've kept us competitive all along," he said, "and we have no reason to believe they won't keep us competitive as we go into July."

source : detnews

 

Oh boy, here we go again. Its like the rebate wars that started 2-4 years ago. Ford is probably soon to follow as well.

On a side note, I love the current GM deals. Good stuff.

 

Good deals on GM but the only GM I would consider is the C6 and of course that's not included.
I have a family member who can give me the GM employee discount certificate and the C6 coupe is eligible with that but finding a local dealer willing to accept it is impossible.