Chrysler’s sales growth may be the envy of the automotive manufacturing industry. However, it has come at a cost. According to research firm Edmunds.com, the Chrysler make had a larger discount percentage to MSRP than any other major make sold in America during October. The figure was an extraordinary 20%.
Ironically, overall sales of all Chrysler makes rose 15.3% to 1,726,539 in the first 10 months of 2014, a growth level not matched by any of its large American or Japanese rivals.
Several other makes sold by parent Fiat Chrysler Automobiles N.V. (NYSE: FCAU) were among the most discounted last month. These include Fiat at 17.6% and Ram at 16.6%. The industry average for the month was 11.4%.
The results should not be terribly surprising. The sales improvements of Fiat Chrysler so far this year have been carried by its Jeep brand, the October discount level of which was only 10.3%. Its sales rose 46% over the course of the first 10 months of the year to 571,585.
The Chrysler make’s sales fell 4% in the first 10 months to 250,616, perhaps a reason it has discounted so aggressively. Fiat sales were up 8%, but only to 39,266. Ram sales were an exception. They rose 26% to 379,647 in the first 10 months. However, Ram operates in the hotly contested full-sized pickup segment, where it sells fewer vehicles than Ford Motor Co.’s (NYSE: F) F-Series and General Motors Co.’s (NYSE: GM) Chevy Silverado.
Luxury cars tend to lead the list of makes with the lowest discounts. In October, the average discount on the Mercedes-Benz make was 8.4%. For BMW, the figure was 9.2%, and for Audi 7.7%. The three Germany luxury leaders have also had extraordinary sales success in the United States this year. Mercedes sales rose 7.5% for the first 10 months of this year to 281,728. BMW sales were up 11.3% to 267,193, and Audi sales up 14.7% to 146,133.
As a note, the least discounted major make in October was Honda Motor Co. Ltd.’s (NYSE: HMC) luxury car line Acura at 5.8%.
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Maybe Chrysler is trading sales for discounts. If industry history is any guide, the expense will eat away at profits.
Edmunds Methodology: The Discount Percentage data is the sales-weighted average percentage difference between the MSRP and the True Market Value of all available trim levels sold in the months indicated.
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