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Chrysler Will Offer Rebates In Bid To Cut Dealer Stocks

Chrysler LLC plans to offer a new round of rebates and incentives in December in preparation for what is expected to be a tough sales year in 2008, people familiar with the matter said.

The campaign will kick off with Dodge, Jeep and Chrysler television ads Nov. 20 and will emphasize the lifetime warranty the company began offering on engines and transmissions earlier this year.

The move could add further competitive kick to what has already been a tough year for the overall U.S. auto market. General Motors Corp. and Ford Motor Co. have had some success this year boosting prices by slowing production and reducing the number of vehicles they sell to rental fleets. Deeper incentives could reduce sales and put pressure on them to relent.

A Chrysler spokeswoman declined to comment, saying, "We don't give advance notice of incentive programs."

Chrysler is cutting production now but still needs to trim dealer stocks of 2007 models. "It's going to be a critical time for all of us, and if we do it well and we help you drive the momentum, we'll be able to have a clean beginning for 2008," said Deborah Wahl Meyer, Chrysler's chief marketing officer, last month during a dealer meeting in Las Vegas, according to a video reviewed by The Wall Street Journal.

The heaviest discounts are likely to come on four slow-selling models that are being discontinued: the Chrysler Pacifica, PT Cruiser convertible and Crossfire, and the Dodge Magnum. The campaign will also include the "Red Dot" discounts Chrysler traditionally offers at year's end.

The effort comes after Chrysler announced plans to eliminate production shifts at five plants and cut 8,500 blue-collar jobs and 1,000 salaried positions.

Chrysler is attempting to bring its business in line with sales demand. The housing slump and high gasoline prices have weighed on U.S. auto sales. Industry sales for 2007 are now expected to be around 16 million vehicles, down from about 17 million in recent years. The sluggishness is expected to continue next year.

The campaign is also aimed at helping Chrysler's new owners rebuild relations with its dealers after the auto maker pressured many of them to take more cars and trucks than they could sell in 2006. Private-equity group Cerberus Capital Management LP bought 80.1% of Chrysler in August.

Next week, Chrysler Vice Chairman Jim Press will begin a series of "fireside chats" with dealers across the country to improve relations, dealers said. The former Toyota Motor Corp. executive will wrap up the tour by Christmas, dealers said.


Source: wsj.com