Chrysler Marketing Strategy Derailed by US Incentives War

07 October 2003

Chrysler Group's attempts to resuscitate its brand may take twice as long as initially thought, the company has warned.

DaimlerChrysler's US unit – which posted an operating loss of €796 million ($924.9m; £553.9m) in the first half – is eager to move its image upmarket and subsequently charge more for its models.

However, its initial target of achieving this in three to five years has been blown out of the water by the incentives war raging between Detroit's big three – Chrysler, General Motors and Ford Motor Company.

The group admits that simply improving its products is not enough to bolster the brand's prestige. Earlier this year it launched the Pacifica at a premium price, but slow sales forced dealers to offer discounts.

"We have been too convinced that the attractiveness and the quality of our new products and, partially, their improved technology, speaks so strongly for itself that it convinces the customers," conceded chief financial officer Manfred Gentz.

Chrysler spokesman James Kenyon agreed: "Here in the States people are very focused on the deal. It makes it more difficult. It may double the time it takes."

In August, Chrysler sales slipped below those of Toyota – the first time a foreign competitor has outsold one of the big three [WAMN: 08-Sep-03].

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