Buy our cars, Chrysler begs
November 23, 2008 ET
(Automotive News)—Chrysler is pleading with its dealers to buy more cars by year-end and is offering $150 million in extra incentives to persuade them.
In exchange for buying more cars, dealers will get cut-rate inventory financing next year. Chrysler also will continue cash rewards for dealers who participate in a wholesale incentive program.
“What we’re doing is fighting for survival,” an emotional Jim Press, Chrysler’s co-president, told dealers during a teleconference this month. “We recognize it’s a hand-to-hand combat situation where we’re digging for every sale.”
Under the plan, Chrysler gives cash bonuses to dealers who meet or exceed the company’s wholesale purchasing target. Dealers will get as much as $1,000 per unit if they buy their target number of vehicles for November and December and $2,000 per unit for each vehicle above the target.
Dealers had mixed reactions. Wes Lutz, owner of Extreme Dodge in Jackson, Mich., said Chrysler’s sales goals for his dealership were realistic. He added that showroom traffic has picked up markedly in the past 10 days.
But a New England dealer who declined to be identified said he would not participate because he has too many unsold cars on his lot. He said his target was more than double what he has been selling in recent months.
An executive at a dealership group said he told his managers to buy only the vehicles they absolutely need because of uncertainty about Chrysler’s future.
“If a company goes bankrupt, there’s some doubt about their ability to be a going concern,” the executive said. “These vehicles lose their value.”
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Buy our cars, Chrysler begs - Financial Week