Chrysler Cuts New Durango Price
But will one successful launch help the beleagured company turn its financials around?
by Joseph Szczesny (2003-10-20)
(TCC Staff) With the launch of the new 2004 Dodge Durango, the Chrysler Group is taking pains to avoid the kind of miscues that hurt the launch of the Chrysler Pacifica earlier this year.
Chrysler said prices for the 2004 Dodge Durango will start at $25,920 or about $1000 below the 2003 Durango before the $4500 rebate on the vehicle is factored into the pricing equation.
Darryl Jackson, vice president for Dodge Marketing, said at the new price the Durango represents an exceptional value, with more room, more content, and more refinement, all delivered at a lower price than the previous-generation Durango.
The 2004 Dodge Durango is seven inches longer, three inches taller and three inches wider than the current Durango, but delivers improved fuel efficiency across its new three-engine line-up. With its third-row seat folded flat, the 2004 Dodge Durango has more cargo room than the Ford Expedition, Chevrolet Tahoe, Toyota Sequoia, and Nissan Pathfinder Armada. The Durango also delivers more leg room, hip room, and head room than the previous generation, Chrysler adds.
"We know the heart of the large SUV market and we have priced for the consumer," Jackson said. "We are $5000 under our large domestic SUV competition, and, a fully-loaded Durango Limited is nearly $10,000 less than fully-equipped large SUV models," he added.
Ordering up success?
Joe Eberhardt, Chrysler's executive vice president of sales and marketing, noted that one positive sign for the Durango has been noted already. The automaker has more than 30,000 orders from dealers for the new Durango.
Chrysler hopes the Durango launch experience will be easier than with the Pacifica, which went on sale earlier in the year. During the launch of the Pacifica, DaimlerChrysler executives ran into stiff resistance on pricing; sales were sluggish out of the box, while the media focused on the wagon's sales as an indicator of the health of the struggling group.
Since that launch, the Chrysler Group has been forced to use several of the industry's marketing tricks to move the Pacifica, such as taking out content and cutting the price as well as offering rebates to stimulate sales. Sales of the Pacifica have been below expectations and only last week DaimlerChrysler was forced to place another $3000 rebate on the vehicle, which was supposed to help attract new buyers to company.
DaimlerChrysler also has been trimming Pacifica production. It has not yet confirmed that it also plans to shut down its Windsor, Ontario, assembly plant where the Pacifica is made for a short time. Officials from the Canadian Auto Workers, however, said early this month that a temporary shutdown of the critical Windsor plant is in the works for the end of October.
DaimlerChrysler also pulled two assembly plants off line last week, idling about 5800 workers both the in the U.S. and Mexico, as part of an effort to hold down inventories of unsold vehicles from piling up on dealer lots. The temporary, one-week shutdowns closed both a passenger car plant in Sterling Heights, Mich., and a plant in Toluca, Mexico, where the PT Cruiser is built. So far this year, Chrysler's passenger car sales are down 14 percent. Sales of the PT Cruiser have dropped 25 percent through the first nine months of the year.
Shutdowns and sales
The temporary shutdowns underscored the continuing challenges facing the Chrysler Group, which now appears headed for its third financial loss in four years.
The temporary shutdowns along with the model changeovers at plants in Newark, Del., and Brampton, Ontario, coupled with steep, double-digit drops in sales and a $1.2 billion loss, have made it difficult for the Chrysler Group to achieve its goal of making a profit, observers have concluded.
Dieter Zetsche, the Chrysler Group chief executive who has remained bullish on the outlook for the group despite the drop in sales and market share, finally acknowledged the company's difficult problems when he told a news service reporter it could be difficult for Chrysler to post a profit in 2003.
The problems have prompted speculation that Zetsche could be forced to implement additional cost-cutting that could require eliminating more jobs. For example, Chrysler said only last week that it planned to outsource its security services to Wackenhut, which will eliminate 455 jobs.
The original turnaround plan implemented in 2001 called for eliminating 26,000 jobs worldwide, and the new labor pact with the United Auto Workers calls for eliminating another 1500 jobs with the shutdown of the company's Indianapolis Foundry and McGraw glass plant in Detroit as soon as the end of the year.
Lindsay Brooke, an analyst with CSM Inc. in Farmington Hills, said the Chrysler Group is facing a series of interlocking challenges. "They still have a reputation for second-tier quality," said Brooke.
At the same time, the vehicles that helped boost the company's sales in the 1990s, such as minivans and sport-utility vehicles, now face "just withering" competition, he said.
Brooke, however, said the recent successful launch of the Durango is still somewhat problematic. The Durango sits on a unique platform and so far, DaimlerChrysler has not developed spin-offs that could help spread the cost of building the vehicle across a larger volume.
Ref:
http://www.thecarconnection.com/inde...&sid=175&n=156
Chrysler Cuts New Durango Price by J. Szczesny
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