The Chrysler group says its certified used-vehicle program is a key part of a strategy to build new vehicles to rival Toyota in reliability and quality within five years.
Jim Schroer, vice president of global sales and marketing, says the program is less about making money and more about polishing the company's battered quality image.
Chrysler group CEO Dieter Zetsche "has said publicly that we will have reliability and quality equal to or better than Toyota within five years," Schroer says. "We're closing in faster than the public realizes.
"Until you break out and establish a reputation for reliability, which Toyota has and Chrysler
doesn't," he says, "people always will be nervous and worrying about the trade-in values of their new Chrysler, Dodge or Jeep. It has enormous strategic significance to us."
Schroer says the certified program will help the company shed its reputation for poor quality, pump up residual values and reduce the need for incentives. Schroer says quality is improving through the Chrysler group's 50 percent reduction in warranty costs since 1996, its sharing of key components with Mercedes-Benz, its eight-year/80,000 transferable powertrain warranties and more targeted advertising.
The Chrysler group, which includes the Chrysler, Dodge and Jeep brands, sold 65,627 certified used vehicles in 2002 and thinks it can increase that by 40 percent to 50 percent in 2003. The group sold 6,838 certified used vehicles in January.
The industry sold 113,890 certified used vehicles in January.
Top seller General Motors sold 37,875 certified used vehicles in January. Toyota Division, the top selling single-line brand, sold 17,830 certified used vehicles last month, followed by Honda at 13,771.
BMW remained the top luxury certified seller at 5,052 in January, followed by Mercedes-Benz at 3,655.
Schroer predicts that as the Chrysler group's certified volume increases, so will new-vehicle residuals. But the company has its work cut out for it.
Automotive Lease Guide of Santa Barbara, Calif., predicts that 2003 Chrysler brand vehicles will retain 40 percent of their sticker price at the end of three years; Dodge, 42 percent; and Jeep, 45 percent. That compares with 2003 Toyotas, which are predicted to hold 52 percent of their values.
Automotive Lease Guide is a widely used benchmark for predicting residual values on leases.