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Automakers pile on incentives to lure car buyers with deals

The continuing slump in auto sales is prompting makers, especially hard-hit Chrysler, to put some of the juiciest discounts yet on new vehicles.

The six biggest automakers — General Motors (GM) , Ford Motor (F) , Chrysler, Toyota (TM) , Honda (HMC) and Nissan (NSANY)— offered the highest incentives last month of any February since started tracking in 2002.

The average discount for all automakers was $2,914, up $400 from a year ago. The total includes all the incentives that Edmunds could find, including cash-back offers and discounted finance rates.

Industry sales for February, due out Tuesday, will show if the increased promotions had any impact.

The real eye-popping deals have come from Chrysler, which topped the group with average discounts of $5,566 per vehicle, up from $3,520 last year.

It's easy to see why: Its dealers are clogged with cars.

The average Chrysler, Dodge or Jeep vehicle is languishing for 130 days at dealerships, the longest of any of the six largest automakers. Ford is second at 113 days, followed by Nissan, GM, Honda and Toyota, Power Information Network reports.

Chrysler also had the biggest sales drop of any brand in January at 54.8%, Autodata says. Complicating its problems, Edmunds says, is that about a third of Chrysler's unsold vehicles are 2008 models, a much higher percentage of leftovers than its competitors.

"Chrysler is basically trying all measures to get rid of its unsold inventory," says Edmunds market analyst Jesse Toprak.

Chrysler spokeswoman Carrie McElwee says the automaker's incentive spending increases and inventory levels are in line with competitors.

Even as they struggle to clear their lots, Chrysler dealers are under pressure to take more cars. Chrysler President James Press has been touring the country pounding home the message that survival depends on dealers ordering more cars. The automaker books its income when cars are shipped to dealers.

Some dealers are encouraged that Chrysler has offered an employee-pricing discount, cash back and cut-rate financing all in the same deal.

"Even with how slow it is, it's really having an impact," says Adam Lee, president of Lee Auto Malls, of its Chrysler-Jeep-Dodge store in Auburn, Maine. "Maybe there is a ray of hope."

A 2010 Dodge Ram Quad-Cab pickup sticker priced at $31,405 is being advertised at $17,975 for buyers who qualify for particular discounts at Jerry Morris' Broadway Dodge in Littleton, Colo. It's a buyers' market, general manager Chris Staton says.

LINK:Automakers pile on incentives to lure car buyers with deals -
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