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.

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[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.

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