Robert Eaton, chairman of Chrysler Corp., spoke to Staff Reporter Frank S. Washington on Tuesday, April 28, in Atlanta about the sales and incentive climate. Here are edited excerpts.
What does the current wave of incentives say about the market?
It says the market is relatively saturated. Part of the demand right now is because of the rebates. We ended up the first quarter at $1,240 (in incentives per vehicle), and obviously it's gone up. There was no price increase this year, so transaction prices are down from last year.
Why are there larger incentives on cars?
The car market has been much weaker than light trucks for a long time. Even with a higher level of incentives, car sales are still decreasing as a percentage of the overall market.
Do rebates affect brand loyalty?
The market in general is looking at the deal, whether it's a luxury car, a traditional passenger car or some of the sport-utilities. It's all relative. Some of the luxury brands are giving rebates through subsidized leases.
What is your 1998 sales forecast?
We're still looking at 15.2 million, which includes heavy-duty vehicles. We started the year saying between 15 million and 15.5 million. We've brought that down.
What about incentives in the 1999 model year?
With the new model year, you'll see some reduction. But as long as the supply exceeds the demand, you're going to have more incentives than what we'd like to see. We're not looking at much chance for 1999 price increases, either. It's a price-sensitive market out there.