Chrysler Sales Top Industry’s Pace as Bargains Trump Bankruptcy

By Mike Ramsey

May 21 (Bloomberg) -- Chrysler LLC is selling cars at a higher rate than the U.S. industry this month, buoyed by incentives of as much as $6,000 and President Barack Obama’s assurances on the automaker’s survival.

Chrysler’s sales fell about 30 percent through May 18, less than the U.S. market’s drop of as much as 33 percent, said Gary Dilts, senior vice president of consumer-research firm J.D. Power & Associates, which collects data from 6,000 dealers.

The results show buyers aren’t turned off from dealing with a bankrupt automaker, a win for Chrysler in its bid to keep revenue flowing and cut inventory while in court protection. Chief Executive Officer Robert Nardelli told Congress in November that a Chapter 11 filing would shred demand.

“We had a pre-bankruptcy target to hit, and it looks we are seeing pretty close to the industry for the month,” Steve Landry, Chrysler’s U.S. sales chief, said yesterday in an interview. “It’s developing fairly well.”

Chrysler’s experience may be good news for General Motors Corp. as the biggest U.S. automaker faces a probable bankruptcy by Obama’s June 1 deadline to restructure outside of court. Then-CEO Rick Wagoner also said last year that sales would plummet in court protection.

Shrinking Market

With U.S. auto sales plunging in early 2009 to the worst annual rate in 27 years, outpacing the market now counts as a victory, even with declines of 30 percent or more from a year earlier. Auburn Hills, Michigan-based Chrysler’s sales tumbled 48 percent last month as its April 30 bankruptcy filing neared, eclipsing the U.S. industry’s 34 percent slump.

J.D. Power, based in Westlake Village, California, collects information from dealers as they make sales. Automakers typically don’t discuss their sales in detail in mid-month.

Chrysler’s goal is to drive down its supply of unsold cars, Landry said. The company’s factories will remain shut until mid- June or later, he said. By the end of June, its inventory may be 250,000 autos, 43 percent less than a year earlier.

Landry credited the company’s sales performance to the incentives and Obama’s assurance in a nationally televised address that Chrysler would survive.

Mickey Anderson, president of Performance Automotive Group in Omaha, Nebraska, said his Chrysler store there “is on pace” to outsell his Toyota Motor Corp. and Ford Motor Co. outlets.

“President Obama helped release a little bit of pent-up demand by clearly stating, ‘They are going to make it,’” Anderson said.

Sales have been higher than average at the 789 Chrysler, Dodge and Jeep dealerships that will have their contracts terminated by June 9, Landry said.

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net