Chrysler To Cut Sales To Rental Fleets; Seeks Dip To 20%

January 03, 2008: 04:43 PM EST


DETROIT -(Dow Jones)- Chrysler LLC said it will reduce its dependence on sales to rental fleets to improve the reputation and residual values of its vehicles and hopes to get fleet sales down to 20% of the total.

Vice Chairman Jim Press, speaking during a conference call to discuss December sales, said the auto maker has been reducing rental fleet sales, but said the move "will be more significant" in 2008.

Competitors General Motors Corp. (GM) and Ford Motor Co. (F) have been cutting their sales to rental fleets substantially.

"It's not a healthy way to manage our business, going forward to rely on fleet," Press said.

Press didn't specify Chrysler's exact level of fleet sales, but said "you have to stay out of the 30% range and into the 20s."

Meanwhile, Press said Chrysler plans a "very small increase" in retail sales in 2008. Retail sales exclude sales to fleet customers, such as car rental companies.

He also said Chrysler will offer enhancements on a number of models without raising prices and could announce details early this year.

Vehicle pricing is under pressure and will remain there in the first half of 2008. Chrysler's plan is to offer customers more value for the money, Press said.

For the industry, Press said he expects the market to be a little weaker in 2008 than in 2007.

Chrysler reported a 0.5% increase in December sales to 191,423, driven by retail demand. Fleet sales were down in December, the company said.

-By Terry Kosdrosky, Dow Jones Newswires; 248-204-5532; terry.kosdrosky@ dowjones.com

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