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from a report in the Detroit News:

Some balk at appeal from automaker's execs to keep up orders of bloated 2006 model stocks


In a meeting Monday, Chrysler Group executives once-again implored dealers to keep up car and truck orders to help the company reduce bloated inventory.

The two-hour meeting at Chrysler's Great Lakes Business Center in Auburn Hills comes as relations between Chrysler and its dealers have frayed in recent months. The automaker admittedly overbuilt Chrysler, Dodge and Jeep vehicles earlier this year in hopes of avoiding costly production cuts and pushed dealers to order the excess vehicles. Some dealers have balked at taking new orders.

Chrysler CEO Tom LaSorda and Joe Eberhardt, Chrysler's head of sales and marketing, appealed to about 500 dealers Monday to continue ordering vehicles to help the company through a rough patch, according to dealers who attended the meeting. Essentially, Chrysler needs to move about 50,000 of its 2006-model vehicles sitting on storage lots around Detroit so it can start selling 2007 models.

Some dealers who asked not to be identified say they're still saddled with 2006-model cars and trucks and do not intend to order more vehicles.

Chrysler's vehicle inventory stood at 533,220 vehicles at the end of September. To help reduce the stockpiles, Chrysler last week began providing dealers with up to $1,500 per 2006 model vehicle. Under the so-called "Red Dot" program, dealers can offer some or all of the money to customers to close a sale.

While Chrysler wants to clear stock so it can book the revenues, dealers are wary of ordering vehicles they may not be able to sell. The longer a car sits on a sales lot the more interest dealers pay. Plus, dealers are wary of ordering more 2006 models with 2007 models on the way.

The excess inventory could pose a problem for Chrysler, which is expected to announce a $1.5 billion third-quarter loss on Oct. 25.

The automaker, which churned out too many SUVs and trucks and reacted slowly to consumer demand for more efficient vehicles, halted production for the last four months of 2006 to get its inventory in line with market conditions. It is banking on new vehicles to put it back in the black.

Chrysler spokesman Kevin McCormick said dealers are not being asked to take on more vehicles than their businesses can handle.

"I don't know how you can force someone to do that," he said. "You can ask them to help by ordering a few more vehicles than they ordinarily would but you can't force them. All we can do is present the picture to them and show them the profit opportunity."

In Monday's meeting, Chrysler executives laid out the automaker's 2007 plan, which includes staying aggressive to sell more vehicles, dealers said. Executives also talked about the record 10 new cars and trucks that Chrysler's pumping into the market this year.

Chrysler projects new products will account for 60 percent of its 2007 sales, dealers say.

And for at least the third time since September, LaSorda took responsibility for the automaker's inventory problem and looming third-quarter loss at the meeting.

The company's inventory issue was among a number of topics that were discussed.

McCormick downplayed dealers' reports that a number of those who attended were unimpressed by the presentation.

"Dealers appreciate that there's a plan to get things done," McCormick said. "They appreciate that there's a plan for how we're going to put our best foot forward in a competitive market."

In September, the automaker allowed dealers to begin ordering vehicles on a weekly basis rather than monthly.

Dealers say the weekly allocation offers more breathing room to determine which vehicles they need based on weekly market conditions.

Not all Chrysler dealers are feeling squeezed by the automaker's bloated inventory or its repeated request to keep ordering.

Alan Helfman, a Chrysler and Jeep dealer in Houston, said 2006 Chrysler models account for 22 vehicles on his lot and older Jeep models account for another 34 vehicles. "That's nothing," Helfman said.

Helfman said he recently sold a 2006 Jeep Wrangler and a Jeep Liberty to a police officer and a physician. He said incentives that Chrysler gradually deepened on 2006 models were the deal breakers for those customers.
 

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These guys kill me. Too much inventory? Windsor Assembly worked overtime on 3 shifts two weeks ago on a Saturday and now are going into their second week of lay off. Brampton Assembly is down next week and yet they are working 3 shifts this Saturday. We are building cars at time and a half to sit in parking lots waiting to be sent to dealers that don't want them because they have too much inventory already.
The right hand doesn't know what the left hand is doing right now.
 

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I think the dealers being over-stocked is being blown out of proportion somewhat. Compared to last year at this time, I don't see much of a difference in inventories of the old model year vehicles versus the new '07's. In our area you can't find a '06 Ram 3600 Dually anywhere. Good luck trying! And even the '07's are a hot commodity. And '06 Chargers and Magnums are mostly gone too. The only thing most of the dealers in this area have left of '06 models, is a few half-ton trucks and Durangos. They will sell.
 

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I deal with dcx everyday and have to agree one hand does not know what the other is doing!
 

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FreeLantz said:
I think the dealers being over-stocked is being blown out of proportion somewhat. Compared to last year at this time, I don't see much of a difference in inventories of the old model year vehicles versus the new '07's. In our area you can't find a '06 Ram 3600 Dually anywhere. Good luck trying! And even the '07's are a hot commodity. And '06 Chargers and Magnums are mostly gone too. The only thing most of the dealers in this area have left of '06 models, is a few half-ton trucks and Durangos. They will sell.

i think dealers never want to be in a losing position. now that i KNOW the dealers are overstocked, its time to look for a new car. :thatfunny
 
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