The Chrysler group will tell its dealers as early as today, July 31, whether it will extend its employee-discount purchase program. The incentive program is scheduled to expire today.
DaimlerChrysler must make the decision after conceding that the Chrysler group faces a bleak third quarter. Chrysler predicted last week it will lose as much as $637 million in the quarter. The automaker is working to get smaller, more fuel-efficient vehicles into the market quickly.
Despite the employee purchase program, Chrysler group inventories in July remained far higher than the industry average, said Tom Libby, senior director of industry analysis for the Power Information Network. Analysts say the Chrysler group will struggle to achieve its goal of turning a full-year profit.
Chrysler group vehicles that sold between July 1 and July 21 sat on dealership lots for an average of 85 days, compared with an industry average of 63 days, the Power Information Network says.
Libby said the July discounts made a small dent in the Chrysler group's large stocks. "Those numbers are too high to be sustainable," he told Automotive News. "They need the Dodge Nitro and Jeep Compass" very soon.
John Lawson, an industry analyst for Citigroup in London, said the company is "busy getting passenger cars into the mix as quickly as they can. But it may be that the market is moving away from them even more quickly."
The Chrysler group posted a $65 million operating profit for the second quarter of 2006, compared with $693 million in the year-ago quarter. The company blamed the decrease on a decline in worldwide unit sales and a higher mix of fleet sales.
Despite the downturn, DaimlerChrysler extended Chrysler group CEO Tom LaSorda's contract through April 2012.
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