Will Employee Pricing Return for Car Buyers This Summer?

Chrysler Group announced last week that it may revive its employee-pricing promotion, a program that drove thousands of consumers to dealerships last summer.

While each of the Big Three among U.S. automotive manufacturers tried variations on the employee-pricing gambit in summer 2005, both GM and Ford Motor Co. have been hesitant to revive the discount tactic.

“We’re looking at stuff that will keep us competitive in the marketplace,” said Darwin Allen, spokesperson, GM. “We’re not looking at that [employee discount] type of promotion.”

Last summer, GM was the first of the Big Three automakers to announce an Employee Discounts for Everyone program, whereby consumers paid the same prices for vehicles that GM’s employees did. Shortly after, Chrysler and Ford followed suit.

So far, Chrysler is the only automaker hinting that it may roll out the promotion again.

Last week, Tom LaSorda, Chrysler’s president said: “We’ve met with dealers and given them a number of options, including employee pricing and money-back guarantees,” according to the Chicago Tribune.

Like other automakers, Auburn Hills, MI-based Chrysler rolls out incentive programs monthly, but this time it plans to announce a program that will “surprise the market and get consumers excited,” LaSorda said, according the Chicago Tribune.

Chrysler spokesperson Sharon Morgan confirmed that the automaker would announce a promotion by the beginning of July.

Last year, Chrysler’s Employee Pricing Plus program offered consumers the discounted price Chrysler’s employees paid for vehicles plus cash-back incentives from July to September. The program, resulted in a 12% lift in sales for Chrysler during the quarter compared to the previous year, said Kevin McCormick, manager of sales and dealer communications, Chrysler.

“It was very successful for us as we had huge increases in sales for the three months,” McCormick said. “It helped to drive volume to our dealerships.” Additionally, the company’s sales climbed 5% in 2005 over the previous year, McCormick said.

But Chrysler recently reported that its U.S. sales for May declined 14% to 191,261 units compared to sales of 214,575 units in May 2005.

“Industry sales were soft in May and Chrysler Group sales displayed similar results,” said Gary Dilts, senior VP-sales, Chrysler, in a statement.

The company blamed declining consumer confidence, rising interest rates and high fuel prices. It said it was addressing consumers’ concerns with more fuel-efficient vehicles and alternative fuel choices.

Meanwhile, Edmunds.com, an online resource for automotive information, reported that of the Big Three domestic automakers, Chrysler spent the most ($3,642 per vehicle sold) on incentives in May. Ford spent $3,200 per vehicle sold and GM $2,774. In total, the automotive industry is estimated to have spent $3.67 billion on incentives during the month, according to Edmunds.com.

While Chrysler gears up to announce a promotion, Ford already has an incentive program called Drive on Us, which offers consumers 0% financing and free fuel through the end of the year. GM has yet to announce a promotion for the summer season.