We Auto Worry

Our local economy has had the Ford and GM shocks. Now a reader thinks we may have a Chrysler problem. Thank goodness we may have a new bunch of doctors from the new medical school both for the spinoff jobs created and to deal with the health and well-being of the potentially laid-off workers.

Allenparkpete asks: Is Chrysler running out of steam? Are their products dating rapidly? Is the competition too tough and getting tougher or was the 300C a great smokescreen for other problems that were neatly masked by the success of that car line. The article below begins to ask questions that were not asked before as the issues plaguing GM and Ford soaked up the headlines. But as we all know, car companies in this area all take their turn at the top...good, bad or ugly. What does this spell for Windsor? As we know with Mr. LaSorda's obsession with manufacturing efficiency that Windsor Assembly has a bright future but will there be more productivity gains at the expense of current workers? Only time will tell.


Is Chrysler's comeback fizzling?

Detroit's strongest automaker may have to cut production as more vehicles languish at dealerships.

CHICAGO -- Chrysler has defied Detroit's downturn in the past two years -- gaining market share and earning solid profits -- but there are growing signs that its comeback may be starting to sputter.

After weaker sales in recent months, Chrysler, Dodge and Jeep vehicles are piling up on dealer's lots, taking nearly three months on average to sell.

On Wednesday, a top company executive said the automaker may need to cut factory production to cope with the surplus.

"We have more inventory than we'd ideally like," said Joe Eberhardt, executive vice president of marketing for DaimlerChrysler AG's Chrysler Group, after a news briefing at the Chicago Auto Show. "And we'll work with our dealers over the next couple of months to resolve that."

Chrysler will consider "adjusting production schedules" if stockpiles remain high, he said. Chrysler and its dealers ended January with a stockpile of 550,000 cars and trucks, down from 597,000 at the end of December.

Production cuts would be a setback for Chrysler, which has outperformed its Detroit rivals for two years on the strength of new vehicles such as the Chrysler 300C sedan.
Chrysler is the only one of Detroit's three automakers that is earning money on its car and truck business, with operating profits up 6 percent to $1.3 billion through the first three quarters of 2005. The company will report fourth-quarter 2005 results next week.

But Eberhardt's comments come amid increasing questions about the sustainability of the automaker's comeback.

Despite a string of wins following a three-year turnaround that shed about 40,000 jobs, Chrysler is beginning to show signs of weakness, according to some industry observers.

"They're still doing better than the other two Detroit automakers," said Jesse Toprak, chief auto market analyst for Edmunds.com. "But it appears they've lost a little momentum from last year."

In January, Chrysler vehicles sat on dealer lots for an average of 82 days before selling, the longest of any automaker, according to Edmunds data. The industry average was 58 days.

Also in January, after sales declines in November and December, Chrysler increased spending on rebates to woo buyers. In January, Chrysler shelled out an average of $4,191 per vehicle, up more than $1,000 since October and the highest of all major automakers, Edmunds said.

For the first time, the company is also providing discounts as high as $1,000 on the 300 in some markets. And some new vehicles such as the Dodge Dakota pickup and Magnum wagon have not been hot sellers.

Chrysler does not publicly provide details about its incentive spending but disputes claims that it has significantly raised rebates in recent months.

Company officials also downplay suggestions that high inventory levels or recent sales declines are signs its comeback is in trouble.

"There's no chink in the armor here," said Jason Vines, a Chrysler spokesman.
Chrysler dealer Jim Kempthorn, however, said the automaker's rising inventories are a major concern. As the glut grows, dealers have been asked to accept more vehicles, which they don't always want or need.

"There has been a constant push," said the owner of Kempthorn Chrysler Plymouth in Canton, Ohio. "Now we are telling them we are full. We really need to get this inventory under control, but it's a real struggle. The people just aren't out there -- they aren't buying."

In December, Chrysler offered its dealers up to $750 for every extra vehicle they ordered during a year-end clearance sale.

And last month, the automaker introduced an incentive program that offers buyers zero-percent interest loans for 60 months on most of its vehicle lineup.

But if Chrysler needs to go further to clear out surplus vehicles, then it should consider all options open, said Chuck Fortinberry, a dealer at Clarkson Chrysler-Jeep.

"If they have to take a little production out so we can clear out the inventory and get the flow going," he said, "then that's a good thing."

Chrysler will introduce 10 vehicles this year, including the Dodge Caliber hatchback and Chrysler Aspen SUV.

Company officials said the new vehicles should bring improved sales in coming months.