As Sales Slump, Chrysler Raises Their Prices

Through the first nine months of 2008, Chrysler’s sales are down a full 25%, representing the worst year over year decline by far of any major automaker who sells cars in the US market. At the rate sales are declining, Chrysler will soon forfeit the #4 spot to Honda as the automaker seeks salvage something from what will likely be a historically terrible year for the company.

Soon after September’s sales totals were announced, Chrysler made another announcement, one that has analysts scratching their head in wonder. To the point, Chrysler says that they are raising prices on their 2009 models across the board – an average of $500 per vehicle – to keep in line with fast rising labor and material costs. The increase doesn’t reflect a $50 bump up in shipping charges, a separate charge Chrysler plans on passing on to its dealers.

A Shell Game For Chrysler

Odd as it seems to institute an increase right now, most consumers will likely not see any of it, particularly if they opt for one of the company’s many slow selling models which can only be moved if heavy discounts are offered. Though the price increases do not include 2009 models already on dealer lots, they’ll be added to all future deliveries. Still, with truck sales down by 250,000 units year to date, Chrysler will need to keep prices down on every Dodge Ram, Jeep Commander, and other big truck and SUV that they’re trying to sell. Likely, discounts will be made available throughout the next selling year, allowing customers to gains real savings regardless of whatever sticker price is shown.

Looking Ahead To 2010

Last month, Chrysler announced that the company was fast tracking a plan to bring at least one electric vehicle to the market by 2010, as they rolled out electric versions of the Dodge Town & Country, Jeep Wrangler, and a sports car that looks similar to the Viper. Chrysler plans on testing these three vehicles over the next year before deciding which one will go into production. General Electric is partnering with Chrysler to develop these cars which will run on a lithium-ion battery.

These are certainly strange times for the auto industry which was hit earlier this year by high fuel prices which resulted in consumer demand shifting almost over night to small cars, a line of vehicles that Chrysler has very few to offer. Then, with the credit industry on the ropes last month, additional sales were lost as customers couldn’t arrange financing. This blow came on top of a hit the company took earlier this summer when they suspended lease options corporate wide.