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Monday, May 08, 2006

 

Chrysler Inventory Rising...Incentives to the Rescue


According to Automotive News, Chrysler dealer stocks have grown to an average 80 days supply. Domestics tend to like about a 60 day supply (the Japanese seem to be much happier with 15-30 days) on the ground so this does not bode well for Chrysler's ongoing recovery. As a result, Chrysler Group is offering $1,250 in cash back for dealers who take their allocation of units.

80 days isn't necessarily a disaster except that interest rates have been rising, increasing the cost of holding larger inventories. The largest offender, unfortunately for Chrysler, is the Jeep Commander, one of their newest models, with a staggering 197 day supply, followed by the highly profitable Ram trucks.

Although many have suggested that Chrysler is the strongest of the former "Big Three" those of us living in town here have seen the overflow lots full of Rams and Commanders. What's next? According to Chrysler COO Ridenour,
"Chrysler plans to trim production over the course of this year."

Although Jeep has needed a 3 row seat vehicle for years now, it's unfortunate that they waited to launch the vehicle in the face of new GM product and $3/gallon gasoline. As noted in one of our previous columns, this vehicle was at least 10 years overdue...

We expect that Jeep Commander lease and purchase deals will get very, very attractive...

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