Chrysler is axing an incentive plan that offered up to double the government’s ‘cash for clunkers’ discounts after dealers complained that new vehicle stock was running short.


The move, reported by The Wall Street Journal (WSJ) came as it emerged late last week the cash for clunkers fund of US$1bn would be exhausted by this week, leading the House of Representatives to vote through a $2bn injection on Friday. The proposal must pass the Senate this week before the rebates can be passed on to consumers.


Chrysler last month offered to double the $3,500-$4,500 government incentive adding up to $4,500 in incentives of its own for qualifying customers.


The WSJ said Chrysler from tomorrow (4 August) would no longer offer a flat $4,500 rebate on top of the clunker incentive but would instead vary rebate size according to model and brand.


Chrysler is changing the message “to focus less on the deal but more on the products,” spokeswoman Jodi Tinson told the WSJ.


The financial newspaper said Chrysler’s recent factory shutdowns while approaching and in bankruptcy protection had led to shortages of popular vehicles as buyers scrambled to take advantage of the government funded incentives to trade old models in for more fuel efficient new ones.


Many Chrysler dealers were left with products that don’t qualify for the clunkers programme, and the company began rethinking its marketing strategy before it was apparent that the government funds would run out fast, Tinson told the WSJ.


Chrysler has said it has an “adequate” 71-day supply of vehicles. But dealers said the incentive – which began only a week ago – brought in a rush of showroom traffic for which they were struggling to get new stock that qualified for the rebates.