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.

Reader Comments

cicelymosquito

June 22, 2006 10:39 AM

DCX's most recent downturn is really of no surprise. A year ago, it seemed just about every automotive journalist pointed to the Chrysler 300 as an explanation for DCX's success while GM and Ford struggled. I don't know why anyone thought they could sustain such growth with basically one car, whose Dodge Magnum and Charger stablemates have seen lukewarm sales at best. Where has Chrysler been in the compact and mid-size market for the last five years? Producing Dodge Strati for the likes of Thrifty Car Rental, Army recruiters and parole officers certainly wasn't going to cut it.

Joel A

June 23, 2006 12:16 PM

Looks like GM's going to start a zero-interest program starting next week as well.

Wes

June 27, 2006 12:52 PM

It's a surprising turn of events. Just two years ago Chrysler was the company to beat with the 300C, the coming Charger, and now they have the 300C piling up on dealer lots. The new Caliber looks promising, but once again, those who don't want a super car or a SUV are left out in the cold.

I suspect the 300C's problem is that everyone who wants one already bought one, and those who just want a decent, cheaper used car are buying the used 300Cs, benefiting from Chryslers' notorious poor resale value at the expense of new car sales.

The HEMI engine is overrated. It's kind of funny to see the commericals advertising the HEMI on everything when gas prices are consistently near $3 a gallon, and anyone who is contemplating paying $500 a month in cash-out refi $$ for a HEMI-powered Dodge Ram to show off is a nutcase.

jeff fuller

February 14, 2007 7:22 PM

They should have produced the Gladiator and got rid of about 5 other new models that do not sell,they should have been ready to produce high mpg diesels like sold and used in Europe.Half ton trucks with a smaller cummins instead of worry of losing some of large ram sales due to a fuel efficient long lasting half ton. Go back to using the dana front end in the 4x4, alot of guys go to ford for this very reason, lockouts , no full time 4wd .To many new models that do not sell and the employees have to pay for it.The us auto makers are always to late to do the right thing, they think they know what the public wants and will buy but do not have a clue. It is simple, dependable and a little old fasioned in this day and time that poeple will buy loyaly,there are more people out there that live conservative than people who want high end models with bells and whistles that get terrible mpg.Gee whizz, I could turn it around.

Gary

February 16, 2007 11:23 PM

The biggest mistake ford did was to drop the Taurus they should have redesign the car and I beleave there would have been a comeback for the car and then Toyota would have eaten its dust.

hAL

October 7, 2009 8:09 PM

the big three as a whole are clu less the asians kick there a@@ at every turn of the ign key lol

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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