| In an effort to unload 2006 vehicles, the Chrysler | | | | $33,000, were used as loaner trucks for one day |
| Group allowed its dealers to designate the new | | | | in May before they were transferred to the |
| vehicles as "loaners" for as short as one day | | | | retailer's used-car business and tacked with a |
| before selling them as used units for sharp | | | | $26,000 invoice. |
| discounts. The decision of the automaker came at | | | | Under the program, a 2006 model-year Dodge |
| the end of May as it envisions finishing the month | | | | Durango SUV with a sticker price of $30,000 as a |
| on a competitive note. | | | | new vehicle could be discounted by as much as |
| Chrysler, Dodge and Jeep dealers can use new | | | | $11,500 on the used-car lot after being used as a |
| vehicles as loaners for test-drives. The vehicles | | | | demo for a day, according to dealers. Like the |
| could also be used by purchasers who need a car | | | | efficiency of the Jeep window motor, the |
| while theirs are in service. Before, dealers have | | | | automaker also expects accurate production and |
| had to use a vehicle as a loaner for three months | | | | sales results. |
| before selling it as used. Now, the requirement | | | | Steve Beahm, the director of field operations at |
| was slashed to just a day to count the vehicles | | | | Chrysler, acknowledged the need to move 2006 |
| as retail sales. This is an effort of the automaker | | | | models as a reason for relaxing the loaner rules, |
| to push the outdated vehicles out of their new | | | | but the said dealers asked for more generous |
| car lots, where they might diminish interest in | | | | terms. Chrysler's loaner program has some of the |
| newer product lines. | | | | most stringent rules in the industry, he said. "It's |
| Last year, instead of cutting production, the | | | | not as if we got this glut of '06s out in the |
| Auburn Hills-based automaker overbuilt the 2006 | | | | dealerships," Beahm said, noting that older models |
| model year vehicles. The excess vehicles are | | | | account for two percent of Chrysler's inventory |
| often parked in lots around metro Detroit. These | | | | or about 9,600 vehicles at the end of May. He |
| vehicles produced scuffles between the | | | | added, “Once the vehicles were transferred, |
| automaker and its dealers. The latter balked at | | | | along with titles and registration forms, to the |
| ordering extra inventory they feared they could | | | | used-car business, Chrysler counted them as |
| not sell. | | | | sales.” |
| Chrysler used huge discounts to get rid of most | | | | Analysts said that the arrangement may appear |
| of the excess 2006 models late last year and | | | | to unfairly inflate sales, but there is nothing |
| such is still continuing this year. The loaner | | | | unethical about it. “It seems almost shady, like |
| program provided a way to eradicate some of | | | | move cars over here to sell, but in reality, it's |
| the last models on dealer lots. "It's a good way to | | | | nothing more than rearrangement of your |
| dispose of some things that we needed to get rid | | | | inventory," said Jesse Toprak, the executive |
| of," said Ken Zangara of Zangara Dodge in | | | | director of industry analysis for Edmunds.com, a |
| Albuquerque, N.M. | | | | research Web site for auto shoppers. "The only |
| The automaker offered dealers $2,000 on top of | | | | thing one can argue is if it's fair or not for the |
| offered discounts to persuade dealers to use the | | | | automaker to count that move as an actual sale |
| loaner program. Zangara moved three 2006 | | | | that month. That's probably the only thing I would |
| Dodge Ram pickups that had been sitting on his | | | | say is a gray area. But there's nothing suspicious. |
| new car lot for about nine months into the loaner | | | | It's just the way the business is done. |
| program. The pickups, each valued at about | | | | |