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Chrysler May Match GM Discount Plan

June 30, 2005|From Associated Press

DaimlerChrysler's Chrysler Group is considering a nationwide discount promotion to match a similar one by General Motors Corp. that extends employee discounts to ordinary customers, according to a published report.

Chrysler told leaders of its national dealer council that it could implement an employee-pricing program as early as next week, but wouldn't make a final decision until it knew whether GM would extend its promotion through July, the Detroit News reported Wednesday, citing "sources familiar with the matter."

Chrysler spokesman Jason Vines would not confirm the report, but said the company had been talking with dealers about what it could do to counteract GM's program and remain competitive.

"We're contemplating everything right now. Do you go that route, do you do something else, do you do something more?" Vines said Wednesday, adding that the company expects to make an announcement Friday or early next week.

"After we close out this month and see how everything shaped up, how GM did, what our competitors are doing, we'll decide," he said.

Automakers will report June sales figures Friday. In a recent note to investors, Merrill Lynch analyst John Casesa predicted that June would be GM's best month since the post-Sept. 11 incentive blitz in October 2001.

Casesa said GM could grab as much as 30% of the market, up from its 25.4% share in the first five months of this year.

But the discount program also will cut into the automaker's profit and lower resale values down the road, Casesa said. And another analyst predicted that GM's total incentive spending per vehicle in June would be an industry-high $4,300.

GM launched the employee-pricing program in an attempt to clear 1.2 million unsold 2005 vehicles from dealer lots before 2006 models arrive this fall and to win over customers from other vehicle brands.

The program allows GM customers to pay what GM employees pay, which is about 3% to 4% below dealer invoice.

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