Chrysler Signals Structural Changes and $1bn H2 Adspend

27 September 2006

DETROIT: Speaking earlier this week to a meeting of the Automotive Press Association, Chrysler Group president/ceo Tom LaSorda warned that "structural" changes could be in the pipeline.

The German-American automaker is urgently reviewing its options after forecasting a $1.5 billion (€1.18bn; £789.4m) operating loss in Q3, alongside overcrowded dealer lots and planned production cutbacks.

Third-quarter retail-vehicle production will be slashed by 90,000 vehicles, or 24%, and second-half output by 16%.

LaSorda described North America as the world's most "cut throat" auto market, further exacerbated by the impact of high gasoline prices on consumers. He called the present situation "a bad bump in the road" common to all Detroit carmakers. Turnround will focus on cutting "bloated inventory of our large trucks, SUVs and minivans."

"We should be in good shape by the end of the year," he predicted, as production becomes aligned with market demand and dealer inventory is reduced. Revival hopes are also pinned on the launch of a new sub-compact car, details of which will be announced in Q4.

Moreover, group advertising spend "is going up dramatically" in the last part of this year, during which Chrysler will more than double its H1 expenditure

Given that the automaker spent $527 million (€413.4m; £277.4m) in stateside measured media in the first half of this year, according to TNS Media Intelligence, H2 spend is set to exceed $1 billion.

Data sourced from Wall Street Journal Online and AdAge (USA); additional content by WARC staff