Amid Record High Transaction Prices, Chrysler Cuts Prices On Key Models

While Chrysler Group sends its Fiat 500 upmarket with Gucci special editions, its sending its Dodge, Chrysler and Ram brands downmarket with a lower prices, 90-days-same-as-cash deals and a variety of tie-ins. First up, the news [via Automotive News [sub]]that Chrysler is cutting the price on 200 and Dodge’s Avenger by $200, and the Dodge Journey by over $1,000 [UPDATE: plus, $3k off Grand Cherokee] is strange indeed. Chrysler’s sales, market share and transaction prices are up, while its incentives and fleet sales are down… and meanwhile, its key competitors are raising prices on increased material costs. Oh, and average transaction prices across the industry have been breaking records all year. With volume slow and prices (as well as costs) rising, Chrysler has no real reason to be lowering prices beyond hunting for volume that may or may not be there. At the expense, it must be added, of profitability. But if you look at Chrysler Group’s most recent maneuvers, it seems that lower prices might not an isolated move on market share. It seems that Chrysler Group is actually strategically positioning itself as the Wal-Mart automaker… literally.

Marissa Hunter, head of Ram brand advertising tells Automotive News [sub] that the truck brand would be expanding its “experiential advertising” to “thousands” of Wal-Mart stores later this year. But not, according to Hunter, because of similarities in pricing strategies.

We recognize the alignment between truck buyers, the hunting/fishing lifestyle and Wal-Mart. We are working on promotion that brings all three together.

Still, what one attribute is Wal-Mart known for? The quality that Frank Zappa identified as “cheepnis.” After all, there are plenty of other stores that connect with “the hunting/fishing lifestyle” that don’t carry Wal-Mart’s ultra-cheap, made-in-China, local business-destroying baggage. And alongside the lower prices, Chrysler Group’s rolling out another Wal-Mart style promotion: 90 days same as cash. Ultra-short-term spiffs like this show that Chrysler will fight GM every step of the way for subprime buyers.

In some respects, this positioning makes sense: Chrysler has to compete on something, and with a double-dip recession looming, why not price? The short answer: because Chrysler has worked too long and hard to rebuild its retail sales and pricing power to throw it all away by chasing low-profit volume. But with a tough 2011 sales target of 45% growth, Chrysler’s already turned to questionable tactics in search of more volume… and the Mopar Mob may now be reviving fears voiced earlier in the year about a price war in order to meet it.