Marchionne Expects Rational Pricing in the US by 2011
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"My expectation is that we will see discounting levels drop significantly over the next 12 to 18 months," Marchionne was quoted as saying by Autonews. He added that the last 30 months saw a desperate chase for volumes at the expense of margins, leading to "unprecedented" discounting.
To avoid problems and preserve their margins, Marchionne said, dealers must have less than a month's worth of inventory. That, he said, "is something that we're dealing with at Chrysler today. I think it's a necessary discipline."
Statements aside, Marchionne's Chrysler has aligned itself to other manufacturer and started chasing volumes. Some may say Chrysler is today the leader of discount, given their latest invention: the doubling of the CARS bonus.
Last week, the manufacturer announced the "Double Cash for Your Old Car" program, which means you can get up to $9,000 for the old vehicles when purchasing a new Chrysler, Jeep or Dodge. In addition, all the way to August 31, Chrysler will offer up to $4,500 Consumer Cash or 0 percent financing for 72 months through GMAC Financial Services on most 2009 model vehicles.
In June, rational pricing was not Chrysler's may focus either. The manufacturer was the biggest spender in terms of incentives, averaging $4,904 in discounts per vehicle, Autonews noted.
Until the 12 to 18 months prediction Marchionne made comes true, Chrysler faces a tough road ahead, including more price cuts and even product discontinuing.
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