Chrysler plans to cut production in coming months to help lower inventory levels at its US dealerships, Joe Eberhardt, Chrysler’s chief of sales and marketing, said on Wednesday.
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Eberhardt, in an exclusive interview with Reuters at the New York motor show, said rising interest rates pose a challenge to the company and its dealers.
“Interest rates have increased substantially, which means … it is a lot more expensive for dealers to keep the inventory, not because they have more, but because of interest rate increases,” he reportedly said.
Chrysler has been in talks with its dealers about this issue and it plans to tackle the problem by adjusting production levels in coming months, Eberhardt told Reuters.
Reuters noted that shipments to dealers are a key metric for the US motor industry, as automakers’ sales are based on shipments and not on the number of cars sold to customers.
According to a UBS research note earlier this month, Chrysler had reduced shipments to dealers by 21% in January and 15% in February, but raised shipments by 31% in March, the news agency said.
Eberhardt reportedly said the increased shipments in March were aimed at building inventory levels before the spring sales season while the lower shipments in January and February were due to reduced production in the plants over the holiday season, adding that this was a move planned to help lower inventory at the dealer level.
In addition, Eberhardt told Reuters, Chrysler has trimmed incentives in certain segments but plans to continue offering incentives in segments such as sport utility vehicles and large pick-up trucks, due to competitive pressures.
