Driving Today: Chrysler Tries to Kick up Incentives in July

Chrysler Tries to Kick up Incentives in July
Driving Today

Auto industry optimism based on positive May sales results was crushed in June, a month that offered only lackluster sales.

On the heels of those results, Chrysler became the first manufacturer to put a big push in the incentives wars this July in an effort to move the sales needle in a positive direction. As you might remember, Chrysler is just a year out of bankruptcy, so gaining positive momentum is crucial for its future success.

The company’s newest incentive salvo on most of its vehicles is a tripleheader: Consumers can choose from 0-percent financing for up to 60 months, consumer cash of up to $3,000 or what the company calls the “Regret Free Purchase” pledge program. The pledge program has received the most publicity because it allows consumers to return a new vehicle within 60 days if they aren’t happy with the purchase, plus the company will make the first two monthly payments for the consumer (up to $500 per month).

The program was first introduced on Chrysler’s minivans in February, and Chrysler says it was so successful that the company decided to extend the offer across most of its vehicle lines. Fewer than 10 consumers have reportedly returned their vehicles after participating in the offer, while Chrysler sold some 80,000 minivans. But because the consumer is forced to choose among the “pledge” and other offers, it’s likely that many will find the 0-percent financing or the $3,000 in customer cash offers even more compelling than the return offer.

The larger question is why we aren’t seeing other manufacturers leaping into the incentive game with compelling new offers of their own? Certainly the June results combined with the economic news, especially continued high unemployment numbers, has brought on increasing fears of a second dip in this deep recession. One question being asked in manufacturer conference rooms is whether new incentive offers can overcome the fear in the marketplace right now? Or is this a good time to hunker down and wait until the sun begins to shine again?

As of now, many manufacturers are hunkering down, and that, in turn, means many consumers will be doing the same.