New Chrysler Incentives: Back to the (Bad) Future

Last Updated May 4, 2010 8:00 AM EDT

Chrysler rolled out a new batch of zero-percent financing or customer cash up to $3,000 on some models, in a bid to keep a modest sales success going. And that brings echoes of Back to the Future -- and not in a good way.

Incentives aren't at all unusual in the auto industry, even as rivals like Ford (F) and General Motors congratulate themselves on reining them in. They have, and so has Chrysler, for that matter, but only relative to high year-ago levels.

However, you really hate to see additional incentives for Chrysler in particular. That's because what's now known as "Old Chrysler" -- that is, pre-bankruptcy, pre-Fiat Chrysler -- was the case study for "Letting Discounts Get Out of Hand."

Chrysler invented the "Buy a Car, Get a Check!" phenomenon back in the 1970s. Unfortunately for Chrysler, a lot of us Baby Boomers will never get out of our heads the spectacle of baseball great and all-around TV personality Joe Garagiola dressed like a carnival barker, pitching Chrysler products.

On the surface, it seems like not a lot has changed. According to, Chrysler already had the highest average incentives in April of the seven biggest automakers in the U.S. market, at $3,374 per unit. That was before the latest Chrysler deals were announced May 4.

Chrysler had its best sales month so far this year in April, with U.S. sales up 25 percent versus the year-ago month, to 95,703. Its car sales, as opposed to trucks, nearly doubled. That big of a change strongly suggests a high level of fleet sales for the month. In the long run, Chrysler and GM went bankrupt last year in no small part because they used discounts and fleet sales to inflate sales at the expense of profits.

Still, the April increase was enough to put Chrysler's year-to-date sales ahead of the year-ago period for the first time this year. At the end of March, Chrysler sales, including the Chrysler, Dodge, Jeep and Ram Truck brands, were down 5.3 percent year to date, while the entire U.S. market was up 24.3 percent, according to AutoData.

You get the impression that Fiat boss and Chrysler CEO Sergio Marchionne is at least forcing Chrysler to live within its means, which suggests that Chrysler can afford this latest round of incentives.

Marchionne keeps insisting that if he turned Fiat around a few years ago, he can turn Chrysler around, too. But it's scary for us veterans to think of Fiat in the role of the sharp-pencil, buttoned-down accounting guys in charge of keeping Chrysler on the straight and narrow. That would have been out of character for "Old Fiat," pre-Marchionne Fiat.

Photo: Chrysler