Chrysler dealers are concerned that its current inventory glut could raise the automaker’s losses.
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According to the Detroit Free Press, dealers who attended annual sales meetings in Detroit and Connecticut this week said that the company is building more vehicles than it has customers for. One dealer said that production plans are ‘out of synch’ with the market.
A survey published this week on US consumer website, Edmunds.com, found that Chrysler cars were being held for an average of 101 days on dealer lots, compared with 88 days for GM, 84 for Ford and just 26 for Toyota.
At the beginning of this week Chrysler still had 50,000 2006 model year vehicles that had not been assigned to dealers, the Detroit Free Press said.
During the meetings, Chrylser CEO, Tom La Sorda, reportedly asked dealers to order more vehicles from inventory to help the company recover. It has already forecast a $US1.5bn loss for the third quarter and a $1.2bn loss for the full year.
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By GlobalDataChrysler is scheduled to release its official third-quarter results next week.
The Detroit Free Press noted that Chrysler has cut production by 135,000 vehicles in the second half of the year.
Other efforts to reduce the inventory include offering an additional $1,000 consumer rebate on vehicles that have been on dealer lots for more than six months, and increasing rebates on larger vehicles that became more difficult to sell because of high fuel prices. According to the newspaper, the Jeep Commander now carries a rebate of as much as $7,500, and the Dodge Durango SUV rebate is now as much as $8,000.
The newspaper also said that dealers think that Chrysler’s future sales plans for new models are over-optimistic. Projected sales of the new Sebring and Avenger are said to be significantly higher than achieved by the models they replace.
IRN auto analyst Erich Merkle told the newspaper; “I think Chrysler is going to have some trouble here this year into early next year. “They’ve got a tough time ahead of them for the next 10 or 12 months.”
