Have Chrysler sales begun a much-needed turnaround?

The most troubled of the Detroit Three automakers has been steadily losing ground, since last year’s reemergence from bankruptcy, even as the rest of the industry begins to rebound from 2009’s devastating sales slump.  But a senior Chrysler official says there’s a glimmer of a silver lining to the cloud hanging over the company’s headquarters, in Auburn Hills, Michigan.

Retail sales for March are so far running 51% ahead of February’s, said Fred Diaz, who heads the new Ram truck division as well as overseeing sales for Chrysler overall.  But there is a downside, Diaz cautioned, during a meeting to outline the brand’s new ad campaign, overall Chrysler sales will still be down 12% compared to year-ago levels.

Diaz downplayed that part of the story, however, noting that in spring 2009, as the maker was heading into bankruptcy, it was dumping hefty incentives onto the market hoping to prop up tumbling demand.  “We were buying the market,” the Detroit Free Press quotes the executive, noting that giveaways in March 2009 were running as high as $8,000 on some Chrysler products.

That’s not to say the automaker is abandoning sales incentives.  If anything, Diaz said it has promised Chrysler dealers it will remain competitive, and that means keeping an eye on General Motors and Toyota, both of which have been spending heavily through rebates, low-interest loans and other givebacks.

But Chrysler does not plan to continue leading the market with incentives, which can quickly destroy any chance of restoring profitability.

Industry analysts expect that Chrysler won’t be able to achieve a significant turnaround in sales – even with hefty incentives – for at least another year.  It has only one truly significant new model coming in 2010, a re-launch of the once-formidable Jeep Grand Cherokee.  But starting in mid-2011, it will begin rolling out an assortment of products developed in partnership with its new Italian affiliate, Fiat.