Like the other major car makers of America, Chrysler is slowing deliveries of new jeeps to dealerships in order to clear up excess inventory on the lots.
Chrysler Group has struck the same pothole as General Motors Corp. and Ford Motor Co., and will cut second-half production by 135,000 vehicles to balance inventories with sagging sales.
As with GM and Ford, Chrysler’s reliance on big trucks and sport-utility vehicles and a dearth of small, high-mileage cars and crossovers is proving costly to the bottom line.
But, unlike its domestic counterparts, Chrysler is stopping short of closing plants and eliminating jobs. Instead, it will cut output with one-week shutdowns, mostly at truck and SUV plants, said Chairman and Chief Executive Tom LaSorda.
“We don’t need factory closings or employee cuts like GM and Ford,” LaSorda told a telephone press conference. “At this stage, we’re talking temporary layoffs and making no announcements about permanent layoffs. And it’s premature to talk about plant closings.”
The production cuts are aimed at whittling an inventory of 600,000 units to 500,000. GM cut second-half production by 20 percent, Ford 21 percent. Chrysler’s cuts amount to 15 percent.
Chrysler sees no consumer shift back to big trucks and SUVs, despite declining gas prices. “Gas prices have come down, but prices were so high so long, we see the shift being permanent,” LaSorda said.
And sputtering truck and SUV sales have hit Chrysler harder than its rivals.
“We rely more on trucks and SUVs, about 71 percent of our mix, so we have a bigger hill to climb,” LaSorda said, adding that Chrysler hopes to get that down to 60 percent, the same as GM and Ford, next year.
“Did we wait too long [to cut production]? Yes, we did,” he admitted.