The story behind the Chrysler group's decline is in the numbers.
Overall Chrysler group sales slid 12.8 percent in January compared with January 2000, from 184,317 units to 160,680. Despite production cutbacks during the previous two months, the automaker still entered February carrying too much inventory of many of its models.
Chrysler began February with total inventory down almost 12 percent since Dec. 1, 2000, from 572,600 units to 505,134. But its days supply of vehicles is up nearly 5 percent, from 78 days to 82 days, reflecting the sales slowdown. The industry considers a 60-day vehicle supply to be ideal.
The numbers underscore the problem that helped create nearly $2 billion in operating losses at Chrysler during the second half of 2000: Dealers had more vehicles in inventory than customers wanted to buy, forcing Chrysler to resort to expensive incentives that cut into profits.
On Monday, Jan. 29, CEO Dieter Zetsche outlined another piece of his turnaround plan: 26,000 hourly and salaried jobs to be cut, six factories idled, and shifts cut or lines slowed in seven other plants. The moves followed mandated price cuts to suppliers and cuts in dealer subsidies.
Chrysler's struggle is reflected in the January sales performance and February inventory levels of what have been the automaker's shining stars - minivans and sport-utilities.
Sales of Chrysler's new line of minivans, launched in the second half of 2000, fell 36.6 percent in January compared with the same month last year, from 40,167 units to 25,453. The company's December and January production cuts did not include minivans. The days supply of the Chrysler Town & Country jumped from 97 days on Dec. 1, 2000, to 106 days as of Feb. 1. For the Chrysler Voyager, days supply leaped from 56 days as of Dec. 1, 2000, to 98 days as of Feb. 1. And for the Dodge Caravan, days supply soared from 76 days as of Dec. 1, 2000, to 88 days as of Feb. 1.
For the automaker's sport-utilities, overall sales fell 16 percent in January compared with the same month last year, from 47,908 to 40,225. Sales of the flagship Jeep Grand Cherokee dropped nearly 18 percent in January compared with the same month last year, from 19,750 to 16,239. And despite shutting down Grand Cherokee production for two weeks in January, the days supply climbed to 79 days as of Feb. 1, after falling from 82 days to 67 days between Dec. 1 and Jan. 1.