Sergio Marchionne, in a statement released with February sales, warned that Chrysler’s sales will likely fall in March 2013, compared with March 2012.
Last year, March was the peak sales month for the company, with over 163,000 U.S. sales, compared with an average of under 140,000 sales per month (during 2012). This year, Chrysler sales rose just 4% in February, ending a stunningly long streak of double-digit year-over-year sales gains.
Mr. Marchionne blamed next month’s projected drop (versus 2012) on the end of Liberty availability, and lack of product due to launches of the 2014 Jeep Grand Cherokee and Compass, along with the Ram Heavy Duty pickups. Liberty went out of production in 2012, but dealers were told to stock up on them, given the unusual length of time the plant would be refitted. The new Jeep Cherokee, which replaces Liberty, is not due to start production until May, as Trenton Engine ramps up 3.2 V6 production and Kokomo works on building nine-speed automatics. The Cherokee will also reportedly use the Tiger Shark 2.4 engine, shared with Dodge Dart GT, but the assembly line for that engine is also still not fully active.
Although the company has not released its advertising budgets, it did make fairly substantial changes in how it allocated advertising at the beginning of the year. This may also be an influence in sales. Some had speculated that Chrysler was carefully allocating advertising funds and vehicle incentives in order to maintain double digit sales increases month to month, both creating a consistent “success story” in the media and returning production to levels where all factories were running at efficient levels (several Chrysler plants are running over their nominal capacity). If this theory is true, Chrysler leaders may now feel that the “comeback story” is credible enough now to allow them to coast until Cherokee sales kick in, in June to August, providing a natural sales boost. It may also be necessary to cut production, as Chrysler builds up an engine and transmission supply for Cherokee’s launch and transitions from WA580 automatics to the new transmissions.
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