Trouble at Chrysler II: No Originality
Posted by: David Welch on June 21, 2006
Chrysler dealers are still saying that everyone is mum about whether top sales exec Gary Dilts left the company in frustration or was forced out. But they say it’s clear that his frequent disagreements with executive vice president of global sales, marketing and service Joe Eberhardt is the root cause for his departure. For his part, Dilts may end up with a top job at mega auto retailers AutoNation Inc. or Roger Penske’s United Auto Group, probably the latter if he decides becoming a dealer executive is his next move. So it looks like Eberhardt got one recalcitrant out of the way and can now execute Chrysler’s sales and marketing strategy without discord from a direct report.
So with his new marketing crew, what brilliant stroke of originality is he coming up with? Employee pricing for everyone. That’s right. BusinessWeek has learned that Chrysler is expected to soon announce plans for an employee price program—just like GM kicked off about a year ago—to thin bloated inventory and get sales rolling again. Chrysler market share is down .3 points through May to 13.7%. Dealers say that Chrysler Group CEO Tom LaSorda told them about the spiff in a video conference call earlier today.
To say that Chrysler’s marketing lacks originality makes an obvious point. GM used employee pricing with great effectiveness last summer to cut its inventory and grab some new buyers. The deal to consumers should help Chrysler get rid of inventory. But the GM-originated incentive plan, which offered several thousand dollars in discounts depending on the model, had diminishing returns as GM stretched it out over three months. So Chrysler isn’t going to benefit from much buzz on this one. For consumers who are ever-inundated with more marketing ploys, this is a tired rerun.
Don’t expect Ford and GM to follow up, either. We have seen in the past that Chrysler doesn’t have the market pull to force its two American rivals to follow them down the same path. It could happen, but I doubt it.
More to the point, it’s now very clear that Chrysler is moving from just plain fighting to sustain a revival to struggling to stay out of the muck. Sales are falling and the company is resorting to deep discounts to turn them around. It was only a quick fix for GM and won’t do much more for Chrysler. LaSorda may at some point soon have to decide if his company needs to make more permanent production cuts if some new models don’t turn things around. Things are getting worrisome at Chrysler again.
