Filed under: Plants/Manufacturing, Chrysler, LLC., Daimler, Earnings/Financials
Flop of 2006: Chrysler dealers cry all the way to the sales bank
So what would you consider the biggest automotive flop of 2006? The Chrysler Sebring? McDonald's Hummer Happy Meals? Schumacher leaving F1 without a ring for every finger? Well, Automotive News thinks it was Chrysler's refusal to face the music and scale back production. Even when faced with a huge loss and plummeting demand for SUVs and trucks.
They remind us that Lee Iacocca had been cautioning Chrysler about creating a sales bank 25 years ago. Not only did they ignore the advice, but Chrysler's management team kept building as many of the vehicles as they could. In the process, the company racked up a $1.48 billion loss in the third quarter of 2006.
More info post jump.
[Source: Automotive News, sub req]
Sure the Chrysler 300 and its Dodge siblings did well and everybody seems to want a Hemi, but the company got cocky, according to Automotive News. Sales were up in 2005 thanks to those employee price plans that sent demand into the Stratusphere. But whereas GM and Ford reacted relatively quickly, Chrysler instead went balls to the wall, and kept building even during our most recent wave of gas price flares. Incentives just couldn't help this time.
Some execs have stepped down and after enough dealers complained, Joe Eberhardt, the global sales and marketing chief, left too. Dealers had a huge inventory and got peeved that Eberhardt wanted them to take even more while they were facing rising floorplan bills. Many dealers expect they'll still have '06 models on their lots for months to come.
Reader Comments (Page 1 of 3)
JasonSK 8:04PM (1/02/2007)
Yup, as much as I like american iron.....(even tho its built in canada(woohoo we pwn)/mexico/germany lol) they really messed up on this one.. and the sebring.. come on.. honestly, what kind of total dolt even thinks about buying one.
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Shawn 8:18PM (1/02/2007)
DC is all German
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Howard Kerr 8:18PM (1/02/2007)
"If you build it, they will come" only works in the movies. Most of DCX's lineup is okay, certainly no worse than any other DOMESTIC producer's, but guys...no one cares if you build a record number (or not) of cars and SUVs. SALES are where the money is. It's amazing that with all the computers at their disposal, car manufacturers STILL have trouble matching supply and demand. OOPS< I forgot about that pesky "human factor".
Gets ya every time
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aaron 8:27PM (1/02/2007)
yeah sebring definitely.. up 16% last month with substantially less fleet sales..
makes perfect sense... to a mongoloid.
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Typesbad 8:41PM (1/02/2007)
That the Sebring had a sales jump upon its launch is no surprise. Its a new vehicle with a new look and substantially improved interior. That is enough get the Chrysler loyal (I assume they are out there) to rush out for the first few months.
The challenge will be how it does in the long run, and in my mind the car just doesn't match the great stride forward among the domestics as evidenced by the Fusion and Aura. And it still looks clumsy both in appearance and engineering next to the leading imports.
Too bad it's exterior doesn't look more like the Nassau concept.
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fordman 8:48PM (1/02/2007)
Chrysler is a mess. I cant see a thing there I would buy aside from the SRT8 Charger. There is nothing special about any of them.
The truck sales have been 850,000 F150, 900,000 GM and 400,000 Ram. With 400,000 capacity for Tundra between its two plants, I see 2007 as:
700,000 F150, 800,000 GM, and 250,000 for Ram. Chrysler cannot handle the Ram selling only 250,000. There is going to be a big mess brewing soon.
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ramsport47 8:58PM (1/02/2007)
you all think you know how to do it better, yet none of you do...shut the F--- up until you can prove your diarreah is true. Drive the Sebring and tell me it's not a fine car. If it was as ugly as you all think it is, even loyalists wouldn't buy it.
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Spiker 9:06PM (1/02/2007)
Still the best US car company. No. 1 US car company in Japan - the significant quantity of Chrysler/ Dodges on Japanese roads speaks to this.
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Poe 9:08PM (1/02/2007)
Well, based on the experience I had with my 2000 Durango, they can keep every damn one of them.
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Damani 9:26PM (1/02/2007)
the sebring is based on mitsubishi's new c-platform, the same that will build the next evo, that said im sure the ride has to be at least respectable, although chystler would change for comfort rather that sport. as for the design......well, it looks kind of odd but ugly isnt really the word ill use. as far the car back-up, thats horribly poor management/ decisions that could cause problems in the future, like lower resale value if promotions are put on to be rid of the vehicles
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Misaniovent 9:35PM (1/02/2007)
I generally like most Chrysler products, including the Compass (a little bit), so I hope things improve for them and they don't make a mistake of this magnitude ever again.
Although I don't find the Sebring ugly, I'd not buy it over its competition. I expect that they will have an emergency refresh in the next two years.
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Adam Singer 10:01PM (1/02/2007)
Although Chrysler's 3rd quarter was awful, just wait for 2006's last quarter info to be published because that's the time that Chrysler really started feeling the pinch.
Ouch.
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Alex 10:15PM (1/02/2007)
I'm a fan of DC, owning both a 05 Durango and an 06 300C. I think they make fantastic cars for the money and I was the happy recipient of significant rebates because they over built. Now if only I can find a way to get an SRT-8 or the Dodge Ram SRT-10 in the next few months. Good cars, great value. Their currently problem is just about supply and demand. Demand has dropped and so they will adjust supply. It will all work out in the end.
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erinm 10:23PM (1/02/2007)
I think the Sebring is a good looking car . Just the other day my 03 accord with 20k on it broke down as usal . A lady pulled up in a new sebring and changed my tire and gave me a jump start , I tell you everyone in indiana is nice , Up close the sebring is hot , like a 4dr crossfire . My next car will be a used cavalier 02-04 , Gm really did its home work on this one .
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Will 10:34PM (1/02/2007)
My Charger was absolute shit, which is why Chrysler has it back now! They can keep the whole mess of them.
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lavardera 11:08PM (1/02/2007)
the sebring looks like a meatloaf
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robino 11:12PM (1/02/2007)
"Only Chrysler can build a nice minivan." Funniest line of 2007. Chrysler builds better mini-vans than Ford or GM because they no longer are in the mini-van market. They sell mini-vans because they and their dealers are willing to drop their pants and bend over the desk whenever a prospective customer walks through the door.
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AJR 11:13PM (1/02/2007)
I would have thought the flop of 2006 would have been the Dr. Z ad campaign. Its very job was to clear out the huge inventories of 2006 models to make way for the 2007 models. Instead, it bombed and put CG into an even bigger hole.
I'm not sure I'd include the new Sebring as a flop. It might do ok, but I don't think I'd call it a flop just yet. I would probably name it the most disappointing remake of 2006. When the first pictures of the new car were shown, I couldn't believe how many people panned the car. It was a big amount of negative buzz on the Net.
Personally, I'm not a fan of the Sebring either. It is an ok looking car, but it doesn't appear to have any big advantage in the ultra-competitive midsize sedan segment. It isn't the most fuel-efficient, it isn't the fastest or most powerful, nor is the Sebring nameplate known for quality. I don't see the Sebring doing anything to dent the Camry's sales. With a new Altima hitting the scene, much improved Malibu, and impressive (possibly?) new Accord coming out next year, I can't see the Sebring competing. It just doesn't offer anything impressive. I know I wouldn't give the Sebring a second look with all these other cars out there now or coming out in a year.
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Chivo 11:34PM (1/02/2007)
Will, you and others like you, are idiots; I'm pretty damn sure you never owned a Charger. And if you did, your still an idiot; only morons make assumptions with one case. Oh, one Charger out of 100,000 came out bad; boo hoo. If we are talking about quality and reliability problems, it's Toyota. Toyota made excelent quality products in the past, but that is not the case today.
The Domestics have major problems today because of its reputations from the 80's. In the 80's they were crap, today they are fine quality vehicles.
Oh, you say that the Sebring is boring and ulgy? But the Camry is even WORSE!!! The Camry sells because of its twenty years of being fine quality products, its reputation, even if they were boring, ugly cars, but as I said, they are no longer those fine quality, reliable automobiles.
Today the domestics are forced to be innovative in order to take sales away from the Japanese. The Japanese are not innovative, they build some ugly boring cars (I'm talking about the non luxury vehicles, Lexus and Infinity are beautiful cars). Once the domestics attract buyers with innovation, they they have to proove their quality and reliability in order to keep stealing away sales from the Japanese.
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Chivo 11:39PM (1/02/2007)
Toyota Motor Manufacturing de Baja California
Manufacturing plant in Baja California, Mexico. Established in 2002.
TMMBC builds Tacoma pickup trucks and Tacoma truck beds. The plant has an annual capacity of 180,000 truck beds and 30,000 Tacoma pickup trucks. The truck beds are used in production both at TMMBC and NUMMI.
Ahhh, so you too Toyota, GO BUILD SOME TACOMAS IN MEXICO!!!
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