As the Chrysler group's sales slump, the company's marketing operations are in turmoil.
Despite falling sales, the Chrysler group cut its spending on advertising in the first three months of 2006. This year's incentive spending per vehicle is much higher than last year's. And the company has lost its second top marketing executive in five months.
"Our inventory is higher than we like," says George Murphy, the group's senior vice president of global marketing. He acknowledges that U.S. retail sales in April and May missed their targets.
But Chrysler group executives say the new Dodge Caliber and the company's minivans are selling briskly. Murphy says the automaker is conserving its ad budget to put "most of its muscle behind the slew of launches in the second half of the year."
The Chrysler group sold 191,261 cars and trucks in the United States in May, down 10.9 percent from the year-ago month. In the first five months of 2006, the Chrysler group's U.S. sales were down 2.5 percent, to 943,600 vehicles.
Ad spending falls
At the same time, the company cut its first-quarter U.S. ad spending on its largest-volume brand, Dodge, by nearly $20 million from the $104 million it spent in the same quarter a year ago, says TNS Media Intelligence.
Ad spending on Jeep fell about $21 million in the quarter, to $59 million. Spending on the Chrysler brand dropped much less -- about $3 million for the quarter, TNS says.
The Chrysler group's average per-vehicle incentive for the first five months reached $3,842, says Edmunds.com. The comparable figure was $3,544 for all of 2005, Edmunds says.
Meanwhile, the Chrysler group's two most visible marketing executives left the company this year. This month, Jeff Bell, the group's vice president of product strategy, took a job with Microsoft Corp. In February, Julie Roehm, who headed the group's marketing communications, quit to work for Wal-Mart Stores Inc.
Bell said he left because he had come to a "crossroads in my career: Do I want to be an auto executive or a marketing executive?" Roehm did not return telephone calls.
Murphy says Joe Eberhardt, the Chrysler group's executive vice president of global sales, marketing and service, "tried like hell" to keep Bell and Roehm. Eberhardt declined an interview request.
Murphy acknowledges that Chrysler group dealer margins are down but says Eberhardt is a major proponent of dealer profitability. He says dealers agreed to Chrysler's request to shift some regional group advertising money from the second half of the year to the first to compensate for the company's cuts in ad spending.
Chrysler's launches in the second half of 2006 include the new or redesigned Dodge Nitro, Dodge Avenger, Dodge Ram 3500, Chrysler Sebring, Jeep Patriot and Jeep Compass.
"You're not going to risk anemic launches," says Jim Sanfilippo, executive vice president of the AMCI auto consultancy in Bloomfield Hills, Mich. "So it would be a smart move to cut back on your early-year ad budget."
Murphy also says the TNS figures on Chrysler group ad spending are misleading. He notes the company spends about 20 percent of its ad budget in new media, which are not part of the TNS report.
An ad campaign for the Dodge Ram 1500 illustrates the Chrysler group's current problems. A contest sponsored by the company -- advertised on TV, in print and online -- sought a new partner for comedian Jon Reep in the group's "That thing got a Hemi?" commercials.
Reep said he filmed two spots with his new female sidekick to air in February or March. They didn't run. Murphy says the Chrysler group killed the spots because they didn't test well with consumers or dealers.
You may e-mail Jean Halliday at [email protected]