Article published November 20, 2008
Chrysler dealer tries to lure buyers by taking losses on Libertys, Nitros
A Monroe auto dealer is launching an admittedly money-losing effort to move Toledo-made metal and get workers at Toledo Jeep Assembly back to work.
On dealership lots and in staging areas across Chrysler LLC's Great Lakes region sit more than 3,000 unsold 2008 Toledo-made Jeep Libertys and Dodge Nitros. The factory where those two vehicles are made has sat idle for several months this year because its models haven't sold.
Now, a Monroe auto dealer is launching an admittedly money-losing effort to move Toledo-made metal and get workers at Toledo Jeep Assembly back to work.
Ralph Mahalak Jr., owner of Monroe Dodge Superstore, yesterday joined a growing list of auto dealerships around the nation to offer new vehicles at a substantial loss - in this case, Toledo-made Jeep Libertys and Dodge Nitros for $11,111 - to customers willing to buy or lease a second new or used car or truck.
"Everyone needs to do innovative things to keep America working," said Mr. Mahalak, who also owns two other Chrysler/Dodge/Jeep dealerships in Shelby, Ohio, and Winterhaven, Fla., and the rights to a fourth in Orlando, Fla. "I'd rather lose thousands now and put some cars on the street and put some Jeep guys back to work than lose all four Chrysler franchises."
The promotion goes through the end of November. Customers who buy a new or used Chrysler, Dodge, or Jeep off of Mr. Mahalak's lot will get the opportunity to purchase a 2008 base model two-wheel drive Liberty or Nitro at the same time for $11,111.
A Chrysler LLC spokesman said yesterday that current factory incentives for 2008 models are $2,500 and sticker prices are $21,090 for the base Liberty, and $20,320 for the base model Nitro. That means consumers could potentially save approximately $7,500 off the sticker price on the Liberty, and
$6,700 off of the Nitro.
Depending on the other vehicle a consumer buys, it also means Mr. Mahalak stands to lose "several thousand dollars" on each sale.
Other Chrysler dealerships nationally have tried selling new vehicles at steep losses in hopes of making up the difference on service, maintenance, and customer loyalty.
This week, a Chrysler dealer in Oak Lawn, Ill. offered to sell 10,000-mile PT cruisers - ones turned in from rental car companies - for $1 to customers who also bought a new Chrysler Pacifica crossover vehicle.
And last summer, when truck sales dried up due to surging gas prices, Ken Zangara, a dealer in New Mexico, sold Dodge pickups for 50 percent off sticker price.
Some of Mr. Mahalak's competitors in metro Toledo, such as Grogan Towne Chrysler owner Denny Amrhein, were openly skeptical of the offer, while others said it was a new "hook" to draw in customers.
"There's just no way that I can foresee this working," Mr. Amrhein said.
Incentives offered by manufacturer Chrysler LLC will help offset the cost of such a promotion, said Tom Schmidt, of Ed Schmidt Automotive Group.
His dealership, which sells Jeeps, doesn't plan to duplicate the offer. "It's a promotional idea and I think in these kind of economic times some people are looking for more hooks than others," Mr. Schmidt said.
John Yark, of Yark Automotive Group, credited Mr. Mahalak for being "innovative," if perhaps not losing as much money as a consumer might think.
"But the reality of the market right now is that the deals … are incredible. The reality of the struggles going on right now is that it's a buyer's market. There are obviously not enough buyers, and the manufacturers are pulling out all the stops to find customers," Mr. Yark said.
LINK:
toledoblade.com -- Chrysler dealer tries to lure buyers by taking losses on Libertys, Nitros
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