Chrysler bargains rolling off dealers’ lots

Discounts of up to $12,000 are driving Chrysler cars off the lot nationwide as bargain-hunting consumers help terminated dealers clear inventory before the June 9 deadline.

“We’ve actually had a better month than we’ve ever had. The [Jeep] lot is empty,” said Hamid Saghafi of Dulles Jeep in Leesburg, Va.

“We’re trying to make deals, some ugly deals, and get them off our lots. Ugly to us, pretty to the customer.”

In Lansing, Mich., Story Chrysler Jeep owner Leo Jerome said sales have never been better, even if he is losing his Chrysler franchise.

“Business is terrific. I’m not just saying that. We don’t have enough sales people to keep up with the people who are coming in,” said Mr. Jerome.

Other Chrysler brands are also selling, though not as briskly as the popular Jeeps.

“Sales-wise we’re doing pretty well,” said John Gunning, owner of Manassas Dodge in Manassas. “We’re down to about 55 Dodges. I think we sold 30 this month.”

Chrysler said on May 14 that it was terminating franchise agreements with 789 dealers, about 25 percent of its total, as part of its bankruptcy restructuring. The terminated dealerships had about 44,000 new cars in stock at the time.

The automaker has offered to help sell and transfer, for a fee, leftover inventory to surviving dealers. Many dealers are already taking advantage of the program.

Some question whether customers and other dealers will be able to absorb their inventory in such a short time and fear they eventually will have to sell at steep losses, possibly at auction.

But 28,000 vehicles - nearly two-thirds of the terminated dealers’ inventory - already have been sold either to customers or other dealers, Chrysler spokeswoman Kathy Graham said Friday. There are 16,000 left, she said.

Chrysler offered rebates this month of up to $4,000 on 2009 models, in addition to $1,000 in “owner loyalty” rewards for current Chrysler owners and $1,000 for members of selected credit unions - which customers can join on the spot. Rebates on 2008 models are bigger. The automaker is also offering zero percent financing for six years on certain models and “generous” factory-to-dealer cash, Ms. Graham said. How much of that cash is passed on to customers is up to each dealer, she said.

The company has not guaranteed to find a buyer for all the rejected dealers’ cars, but Ms. Graham noted that Chrysler has not produced any new cars since May 1 and that 44,000 cars represent about two weeks’ worth of sales.

“We don’t anticipate any problem at all moving the inventory that the dealers would like us to move,” she said.

Still, most dealers expect they will lose money on cars they sell to other dealers.

Story Continues →