Chrysler Planning Increase in Leasing to Boost Sales

Chrysler Group LLC is attempting to boost sales without using huge discounts or incentives to lure customers into showrooms. They are hoping that leasing option offers and a few different model upgrades will be enough to turn around their plunging sales numbers.

Over the next six to eight months Chrysler will be offering a wider range of leasing options in hopes that leases will account for approximately 10% of total sales, up from the current 7%.

Someone familiar with the leasing situation at Chrysler said recently, We went from leasing accounting for 20% of our sales to zero earlier this year. There needs to be some leasing options but no more craziness.

The craziness most likely refers to the lease deals offered by carmakers like Chrysler, General Motors Company and Ford Motor Company during times of slumping sales that featured no down payments and easy monthly terms. Such deals drove traffic into the dealerships but sometimes ended up costing the companies money in the long term.

In the midst of the financial crisis of the last year, GM and Chrysler put an almost complete stop to leasing deals. However, now that a sizeable increase in sales is absolutely crucial, leasing seems necessary.

In November of this year, Chrysler’s U.S. sales fell 25%; car industry sales as a whole remained flat. According to dealers, December was a rough month as well.

Don’t look for the no-money-down, $199 offers, says a person familiar with the company’s leasing plans. Chrysler will not be subsidizing risky leasing deals, this person says.

Instead, look for new, attractive feature combinations on Chrysler vehicle models.

The Jeep Patriot SUV will now have electric locks and window controls on the base model. The Dodge Journey wagon will also be priced to compete with the newly designed Chevy Equinox from GM.

The model upgrades are a part of CEO Sergio Marchionne’s five year plan, announced last month. His goal is a breakeven year in 2010 and a profit the following year, with full government loan repayment in 2014. To do this, Chrysler will be making Fiat-designed cars available in the U.S. using a plant in Mexico to build the vehicles.

A person familiar with the plan said, “We believe sales have bottomed out, so it’s no longer [about] making decisions based on a day-to-day outcome. It’s about long term, instead of chasing sales. We are focusing on rebuilding the brands and reaching customers who shop based on image and quality rather than just getting a good deal.”

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