Chrysler Corporation just announced a beefed up incentive, Cash for Clunkers, to entice buyers to purchase their fuel efficient cars. Combined with a government program of the same name, auto buyers who trade in their old gas guzzlers stand to receive incentives of between $4500 and $9000.
The programs are designed to get older, less fuel efficient vehicles off the road, and to boost the sale of Chrysler products obviously. It’s too bad the program is not in effect here in Germany, or else we could trade the “clunker” Mercedes A190 we hare having so much trouble with. For US auto buyers and Chrysler, this seems to be a win-win proposition, as consumer trust in the Chrysler brand sank when news of their imminent bankruptcy hit the presses.
New car sales for Chrysler plummeted by 47% between the first half of 2008 and the same period this year., but the auto maker has had sales woes for years. For this writer, the question arises; “How is giving away thousands going to increase revenue?” The 33 Chrysler models eligible for these incentives will obviously be sub-compact, compact, or super fuel efficient sedans. The point here being, the price markup for lower priced vehicles net’s less cash when these vehicles are sold in the first place, or at least one would think so.
The government’s contribution not withstanding, just how is giving away profit going to help a car manufacturer in bankruptcy? Maybe I am stupid or something, but this feels like one of those “bait and switch” deals to me. Given a statement by Steven Beahm, VP-sales operations Chrysler, it looks like getting people inside the dealership may be the reason the auto maker is “piggybacking” on the government shell out:
“Everyone shopping for a new car or truck qualifies for an incentive of up to $4,500, even if they don’t have a vehicle that qualifies under the U.S. government’s program.”
It is also interesting to note that Ford plans no such “matching” program for their buyers, and why should they? According to Mark Fields, Ford President of the Americas; “We feel we have an appropriate level (of incentives) right now.”
A far as PR goes for Chrysler, forking over thousands has two effects. First, it does appeal to the public’s pocketbook, and there is the “do good” spin in as far as getting those bad old gas guzzlers off the streets. Secondly however, it implies a relative weakness, and people do not buy weak brands unless it is a “going out of business sale” where they can clean up. For a nation of people who invented the gas guzzler, and after having had them shoved down their throats for decades, transitioning to puddle jumpers like we drive here in Germany will not be fun at first.
Just to ease the pain of all “puddle jumper” hating Americans, besides our nightmare with the Mercedes people here over an A Class lemon, the cars are actually nice. I do miss the occasional 4 door, dual wheeled, 1 ton, long bed, pickup truck and the stomper 4×4 occasionally though. Those times are rare indeed, and in general only happen when I wish for something to run over an idiot in an Audi. For Chrysler, and probably GM later on, whether Cash for Clunkers is just PR or not, obviously the consumer stands to benefit, and that is a good thing. For those readers concerned that Chrysler is dedicated to eliminating America’s thirst for gas, the video below of an American headed to the grocery store should relieve your pain – Cash for Clunkers is not altruism.
Chrysler generally handles most PR internally, although they have worked with Ignite Social Media, Coyne Communications & Sapient Nitro.