Dear Colleagues, The global economy can’t turn on a dime. Nor can an industry such as ours, even with all the best people working as hard as they can. It still takes time, and it can be frustrating because it takes so long to see results. And it’s even more difficult to see positive results in the midst of an economic crisis marked by frozen credit markets and shaky consumer confidence. But in spite of the challenges, there also are some positive developments. From that perspective, I’d like to share some of my thoughts with you.
Let’s start with February sales in the U.S. market. The real news is that we gained 1.4 points of retail market share in February compared with a year ago, coming in with an 11 percent share. Chrysler climbed to the No. 2 spot in retail sales among U.S.-based automakers last month, beating Ford—an accomplishment highlighted by the Dodge Challenger outselling the Ford Mustang coupe and convertible combined. Although our retail sales fell 26 percent last month, we outpaced the overall industry, which saw retail sales drop 35 percent. When you factor in a 71 percent reduction in fleet, our overall sales were off 44 percent in February. This is the number most widely reported in the media. But keep in mind, we made a strategic decision to reduce fleet sales over the past year-and-a-half. When there are too many fleet vehicles in our mix, it hurts our profits, our customers, our dealers and eventually the resale value of our vehicles. Our dealers did a great job of selling last month, aided by Chrysler Financial’s more aggressive support for consumer financing. We also maintained a consistent marketing and advertising presence with a clear focus on value and quality, and customers are starting to recognize this in our products. Our dealers and our company committed to a singular marketing strategy based on “Employee Pricing Plus Plus,” with advertising dollars efficiently targeted to the same message. In addition, both dealers and the company contributed to aggressive pricing actions that gave us a competitive advantage in the marketplace, especially in Ram trucks and minivans. On the financing side, the combined total number of contracts financed by Chrysler Financial and credit unions doubled from approximately 20,000 in January to 40,000 in February. Chrysler Financial’s approval rate increased by 50 percent, to 70 percent. In all, we were significantly closer to historical levels of financing in February vs. January. I want to emphasize that no government loan money was used to fund customer incentives. Our incentive spending is in line with our overall budget plans and reflects the position needed in the marketplace today to achieve our volume targets. We’re looking to build on our momentum in March, as we continue our “Employee Pricing Plus Plus” program and add the availability of a “no charge HEMI®” on the Dodge Ram 1500. From an industry perspective, the February seasonally adjusted annual rate (SAAR) of sales of 9.3 million vehicles continued to be far below historical levels. However, it is worth noting that the pace of retail sales rate decline has slowed over the past few months. U.S. industry retail sales increased 17 percent from January to February this year. Chrysler outpaced the industry in February with a 26 percent increase in retail sales compared with January. For more details about industry and Chrysler sales results for February, please HYPERLINK "http://scoop.chrysler.com/2009/03/04/february-retail-sales-a-bright-spot-fo r-chrysler/"click here to see a Steve Landry video on The Scoop. In Canada, we were the No. 1 selling vehicle manufacturer in February for the first time ever in our 84-year history. The versatile, fuel-efficient Dodge Journey was the country’s No. 1 crossover. Vehicles that posted sales gains over January included Canada’s No. 1 selling minivan, the Dodge Grand Caravan, as well as the Dodge Caliber, Jeep® Patriot and Jeep Compass. Congratulations to our Canadian operations and our dealers for doing such a great job in challenging times. Last week also saw the release of Consumer Reports’ annual auto rankings, which included criticism of the quality of our vehicles. We know we still have a long way to go on the quality front, but we have made progress not reflected in this latest report. I want to reinforce the message that Doug Betts sent out last week: these ratings are, for the most part, the same ones issued last fall and are based only on vehicles built in the fall of 2007 and older. In other words, this data does not reflect the quality initiatives and efforts we put in place since becoming a stand-alone company. It doesn’t take into account the 400 improvements we made to our products; the 30 percent decline in our warranty claim rates compared with last year; or the fact that Chrysler had the lowest recall rate of the seven largest OEMs last year. We are confident the quality improvements that we’ve made will eventually show up in independent, third-party rankings. Our cross-functional Customer Satisfaction Teams are making great progress in improving quality and the customer experience. We are using new tools like the Customer Promoter Score to measure how well we are meeting customer expectations much sooner than before. HYPERLINK "http://scoop.chrysler.com/2009/03/04/teamwork-timing-drive-vehicle-quality- gains/"Click here to see a video about these quality programs. The Geneva Motor Show presented a great opportunity for us this week. We met with a number of European dealers and distributors and some of the world’s elite auto journalists, giving them the chance to drive the Dodge Circuit EV, one of the electric-vehicle prototypes developed by our ENVI group. Journalists were taken to a closed test facility where Frank Klegon and Doug Quigley, a senior manager on our ENVI team, gave a presentation about the vehicles and then allowed the media members to get behind the wheel and drive the vehicle themselves. The reaction from the media was phenomenal, with many commenting on the high performance of the Circuit EV and its quiet operation. Several were impressed with the “no compromise” nature of the vehicle and its close-to-production feel. Chrysler’s stand at Geneva included the Chrysler 200C EV concept as well as the Dodge Circuit EV, adding more impact and credibility to our electric-vehicle story. We still have a tough road ahead, with a lot of work to do in terms of getting all the concessions needed from all stakeholders in order to achieve viability. But we are confident we have the right plan. Our task at hand now is to focus on what we can control, by committing 100 percent of our efforts to deliver to our customers the quality and fuel-efficient vehicles they deserve at attractive prices. Jim Thanks, Tom Hargrave HYPERLINK "http://www.kegkits.com"www.kegkits.com 256-656-1924 No virus found in this outgoing message. Checked by AVG. Version: 7.5.557 / Virus Database: 270.11.9/1988 - Release Date: 3/6/2009 7:17 PM -------------- next part -------------- An HTML attachment was scrubbed... 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