Chrysler’s sales fell 48 percent in April, underscoring the challenge it faces in trying to attract buyers while it reorganizes in bankruptcy.
The decline, reported Friday, was the biggest drop among major automakers, and considerably worse than the industry average of 34 percent compared to a year ago.
But Chrysler’s sales are dropping fast month to month, as well. It sold 24 percent fewer vehicles in April than in March, while the Ford Motor Company and even General Motors, which could find itself in bankruptcy by the end of this month, improved from March to April.
Chrysler executives, though, said they remained optimistic. On Thursday, the day that Chrysler filed for bankruptcy protection and President Obama urged consumers to buy an American-made vehicle, they said the company had 11,400 sales, about 15 percent of its total for the month.
”We closed a lot of deals after the fact,” said Steven J. Landry, Chrysler’s executive vice president for North American sales. ”Our showrooms were busy last night. Dealers said customers came into the showroom and bought a car based on President Obama’s speech.”
The one-day sales flurry — up to 20 percent of an automaker’s monthly sales typically occur on the last day — might be encouraging. But experts cautioned that it may not be a good indication of Chrysler’s prospects.
”The challenge is going to be for Chrysler to communicate some sort of a compelling reason to buy their products,” said Jeremy P. Anwyl, chief executive of Edmunds.com, a Web site that gives car-buying information to consumers. ”Even with warranties being guaranteed, what’s the reason to consciously pick a Chrysler, Jeep or Dodge over a competitive vehicle with all of this stuff going on?”
Sales fell 33 percent at G.M., which could follow Chrysler into bankruptcy by June 1, the deadline set by the Obama administration for G.M. to prove to the government that it had a viable business plan and should receive more government loans.
G.M. fared better than Chrysler last month, partly because it increased sales to operators of large fleets, while Chrysler intentionally cut back on fleet sales, which are less profitable than sales to individual customers.
G.M. also has been in less danger of having to shut down than Chrysler, which had previously said that bankruptcy could result in liquidation.
But four brands that G.M. plans to eliminate have suffered. Sales at Pontiac, Saturn, Saab and Hummer were down a total of 55 percent, compared with a 29 percent decline for Chevrolet, Cadillac, Buick and GMC.
More shoppers are turning to the Ford Motor Company, which outsold the Japanese automaker Toyota in April, compared to themonth before, for the first time in more than a year. Ford’s sales declined 32 percent, compared with a 42 percent drop for Toyota.
Ford’s decision not to take billions of dollars in federal aid appears to have improved its image.
The company’s retail market share, which excludes fleet sales, has increased in six of the last seven months. Ford said it is seeing more people trade in rival vehicles at its dealerships.
”We’ve been seeing G.M. and Chrysler owners, and we’ve been seeing Toyota and Honda owners and other brands,” Ford’s chief sales analyst, George Pipas, said.
Some Chrysler dealers could have difficulty making sales this month after the company’s lending arm, Chrysler Financial, said it would be shutting down as part of Chrysler’s restructuring. GMAC Financial Services, the lending arm of G.M., will begin to finance vehicles sold by Chrysler dealers instead, starting later this month.
Friday was the last day of production at Chrysler’s North American plants, which are scheduled to be shut for 30 to 60 days while the company goes through the bankruptcy process. Meanwhile, G.M. is closing 13 of its factories for up to 11 weeks, starting as soon as Monday, to clear out inventories.
Chrysler, in an effort to keep sales from stalling in bankruptcy, plans to introduce a new incentive program next Tuesday. There will be additional discounts for people who previously bought a Chrysler, and the company will send out mailings detailing the offers to nine million of its former customers.
Chrysler also is running full-page newspaper ads Sunday and Monday with the tagline, ”We’re building a new car company. Come see what we’re building for you,” to highlight its new alliance with the Italian automaker Fiat and to emphasize that Chrysler is not closing.
”It’s uncharted waters,” said James E. Press, a Chrysler vice chairman. ”We’re all going into this thing learning every day. We’re fighting back.”
PHOTO: Ford Motor, which refused government funds, sold more cars than Toyota in April. Above, a Ford dealer in Stamford, Conn.(PHOTOGRAPH BY J. GREGORY RAYMOND/BLOOMBERG NEWS)(pg. B4)
CHARTS: How the Industry Fared; Most Popular Cars and Trucks; How the Automakers Fared. (Source: MotorIntelligence.com) (pg. B4)