Can America's credit unions -- and up to $6,000 in new cash incentives -- help reverse Chrysler's steady sales decline?
With consumers steering clear of its showrooms, worried about the impact of the automaker’s bankruptcy, Chrysler LLC is launching a new round of incentives that could shave up to $6,000 off the “bottom line” cost of a new vehicle.
To expand the appeal of the “Invest in America” program – and to help the maximum number of potential buyers qualify for loans – the bankrupt maker is partnering with 1,500 U.S. credit unions, as part of the program.
All buyers qualify for $4,000 “Consumer Cash” on 2009 Chrysler, Dodge and Jeep vehicles. Another $1,000 will be added to the pot for current Chrysler owners purchasing most of the automaker’s leftover 2008 and current ’09 models. And for those who finance their vehicles through a participating credit union, Chrysler will kick in another $1,000. The incentives are available through June 1st.
“Consumers are telling us that the net purchase price of the vehicle is the most important factor right now, so we are pleased to introduce incentives that address what the consumer is looking for,” said Steven Landry, Executive Vice President North American Sales and Marketing, Global Service and Parts – Chrysler LLC, in a statement released by Chrysler.
While the auto industry, as a whole, is down sharply, this year, Chrysler is facing particularly serious problems luring buyers into its showrooms. Industry data suggest that even potentially loyal buyers are worried about purchasing a vehicle from a bankrupt company. A study by CNW Marketing found little changed when President Barack Obama, in late March, announced that the government would back the warranty programs of both Chrysler – which went into Chapter 11 on April 30th — and General Motors – the latter maker also facing the threat of bankruptcy, next month.
The industry, overall, was off by 34 percent, in April, with sales running at a seasonally adjusted annual rate, or SAAR, of just 9 million, down from a peak of more than 17 million, earlier this decade. Chrysler, meanwhile, reported a sharp 48 plunge, among the worst in the industry.
While economic woes may have tightened consumers’ belts, the issue of credit availability is also a factor of concern – both the potential buyers and automakers alike. Another CNW Marketing study found that as many as 800,000 potentially qualified buyers stayed out of the U.S. market, during the first quarter, incorrectly assuming that they’d not be able to line up a car loan. The new Chrysler program aims to address that problem, as well, at least among the estimated 50 million members of American credit unions.
Chrysler also hopes to strike a chord with the patriotic theme of its new “Invest in America” incentives, but research shows that “Buy America” campaigns have little resonance beyond core markets, such as Detroit, these days.