DaimlerChrysler Chrysler Group on Wednesday became the last of the Big Three car makers in the United States to offer employee discounts on its vehicles, raising the stakes in a price war with a very uncertain outcome, the Associated Press (AP) reported.
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Under the programme, which runs until August 1, Chrysler reportedly is offering some Chrysler, Dodge and Jeep vehicles at the employee rate plus up to $US3,500 cash back.
AP noted that Chrysler is following the lead of General Motors, which began offering an employee discount to customers on June 1, and Ford, which announced an employee pricing plan last Tuesday.
According to the report, Chrysler also said that its former chairman and chief executive, Lee Iacocca, who led the car maker’s turnaround in the 1980s, is expected to appear in advertisements for the new promotion which excludes the Chrysler 300, the Dodge Magnum, Sprinter and Viper and the Jeep Liberty Diesel. All 2006 models and SRT ‘sports’ model derivatives are also excluded.
The Associated Press said GM’s sales jumped 41% in June thanks to the discount, which allowed customers to buy vehicles for an average of $400 to $500 less than they spent in May – Ford and Chrysler followed after lacklustre sales in June.
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By GlobalDataThe news agency said quarterly sales results, which will be released in mid-July, will show how much the discount programme has cost GM but Jesse Toprak, an analyst with the automotive research firm Edmunds.com, reportedly said early signs indicate the programme was cost-effective.
In general, Toprak told the Associated Press, GM paid for the discount by taking away cash rebates and other incentives – GM reportedly said more customers were willing to buy rather than lease, which held costs down, and customers also bought more expensive vehicles than they might have because of the perceived savings.
Citing Autodata, AP said GM spent an average of $4,458 per vehicle on incentives in June, up $449 from May.
Toprak told AP Ford and Chrysler could have the same success with minimal cost if they follow GM’s strategy – Ford already has taken away some cash incentives to help pay for the programme, he said.
