Chrysler Bucks Detroit Trend, Retains Sales Incentives

11 April 2006

DaimlerChrysler's US unit Chrysler aims to continue offering auto-buyers robust incentives, says ceo Tom LaSorda. He has no plans to emulate General Motors or Ford, both of which are trying to wean consumers from margin-eroding incentives.

Confesses LaSorda: "We tried what they did and we lost our shirt."

In March Chrysler let loose a salvo of incentives, including interest-free financing for up to six years. Credit Suisse analyst Chris Ceraso believes LaSorda's tactics could work. He estimates that Chrysler hiked incentives by 9.3% last month to an industry high, averaging $4,241 per vehicle.

This raised the automaker's market share to 15.5%, up year-on-year from 14.7%. "It may be an expensive strategy for Chrysler," Ceraso opines, "but any sustainable gain in market share might be worth the cost."

GM, on the other hand, replaced discounts and other incentives with lower sticker prices on the bulk of its models and suffered a 14% drop in US sales, reducing its market share in March to a post-WW2 low of 23.3%.

Data sourced from Financial Times Online; additional content by WARC staff