Posted on: Sunday, March 21, 2004
Chrysler rumored to lead in sales incentives
By Sarah A. Webster
Knight Ridder News Service
DaimlerChrysler AG's Chrysler Group is disputing it, but several industry researchers say the auto-maker that was once so critical of the incentive game is now leading it — surpassing longtime front-runner General Motors Corp. by several measures.
GM dramatically ramped up incentives to bolster sales after the Sept. 11 terrorist attacks, starting an intense pricing war. Chrysler executives have complained often since that they were all but forced to follow suit.
In recent months, though, the Auburn Hills, Mich.-based arm of the German company has adopted a noticeably more aggressive pricing strategy as it aims to clear out existing inventories to make room for nine new models this year. Five of those cars and trucks, including the new Dodge and Chrysler minivans, are now in showrooms.
The Chrysler Group kicked off the year with its Zero-Plus program that for two months offered interest-free financing and a $2,000 rebate, and also began pumping up its cash-back deals. The company offered as much as $5,500 on its previous-generation minivans in February, reported Autodata Corp. of Woodcliff Lake, N.J.
"We've got more incentive to clear our showrooms than anybody," said Chrysler Group spokesman Jason Vines, who disagreed that the automaker now spends the most on incentives.
Carmakers don't reveal how much they spend on incentives, which include cash-back rebates to consumers and dealers, zero- or low-interest financing, special leasing deals, bonuses to salespeople and extended warranties.
But independent research companies such as Autodata, CNW Marketing Research Inc. of Bandon, Ore.; Edmunds.com of Santa Monica, Calif.; and the Power Information Network of Westlake Village, Calif., evaluate and track the data using a variety of methods.
Several of those firms show the Chrysler Group ramping up incentives so much this year that it is either outspending GM, or close.
The Chrysler Group has been offering the fattest cash rebates directly to consumers for 5ý months, according to the Power Information Network, an affiliate of the research firm J.D. Power and Associates.
While Autodata reports that GM still has a $241 lead on Chrysler Group's incentive spending this year, Edmunds.com reports that the Chrysler Group outpaced GM in total incentive spending for the past two months.
Edmunds.com reports that the Chrysler Group — which sells Chrysler, Dodge and Jeep vehicles — had a major year-over-year increase on incentives this year, spending an average of $3,851 per vehicle on incentives in January, up 56 percent, and $3,857 in February, an increase of 42 percent.
GM and Ford also increased incentive spending for their domestic brands, but their year-over-year increases were 20 percent or less. GM spent $3,479 per vehicle in January and $3,450 in February, Edmunds.com reported. Ford Motor Co. spent $2,829 in January and $3,031 in February.
Autodata also noted the Chrysler Group boosted year-over-year incentives more than any other automaker for the first two months of the year. Chrysler's per-vehicle incentives grew to $3,904 in January and $4,007 in February, Autodata reported. That's a year-to-date increase of 46 percent, against an industrywide increase of 33 percent.
Typically, GM leads the incentive race, with the Chrysler Group and Ford not far behind. Asian and European automakers usually spend thousands of dollars less.
Sales of Chrysler Group products have improved significantly with the incentive increases, although it's not clear exactly how much they contributed.
The Chrysler Group posted a 6.6-percent sales increase through February and captured 13.3 percent of the market, an improvement of 0.3 percentage points over the same period last year.
