Chrysler Group says it will make the first two months' payments on most new vehicles bought this month in a bid to boost sales after a weak June.
Chrysler will pay up to $500 per month for a total of $1,000 on most vehicles. Customers also get the option of taking $3,000 to $4,000 in cash or making a "regret-free" purchase, in which they could return any new vehicle within 60 days if they're not satisfied. Other July incentives include zero-percent financing on most Chrysler, Dodge, Ram and Jeep vehicles. All the deals are set to end Aug. 2.
Automakers have been trying to limit incentives, which erode profits and hurt brand image. On average, incentive spending was down $169 per vehicle in June compared with the same month last year, according to auto information company Edmunds.com.
It might have fallen even further if not for Toyota Motor Corp., which normally offers few incentives but has pumped up spending since March after a spate of safety recalls. Toyota spent $2,117 per vehicle in June, more than double what it spent in June 2009.
Chrysler's new deals could turn around the anti-incentive trend, which has been a drag on sales, Edmunds CEO Jeremy Anwyl said. The industry has been spooked by weaker-than-expected June sales. U.S. auto sales fell more than 10 percent from May as buyers continued to worry about the economy. Chrysler's sales dropped 12 percent from May.
"Consumers have been waiting for automakers to trigger the start of the summer sell-down season," Anwyl said.
Chrysler spent $3,295 per vehicle in June. That was down more than $1,500 from June 2009, when Chrysler was emerging from bankruptcy protection. The company won't say how much the new incentive program will cost.
Vehicle return guarantees are rare but not unheard of. General Motors Corp. started the trend last fall, when it offered a rebate or a 60-day guarantee after its own stint in bankruptcy. Most customers took the rebate, and only about 50 vehicles were returned.
Chrysler offered a similar deal on its minivans starting in February. To date, eight customers have returned minivans under the program, spokeswoman Kathy Graham said. Chrysler sold more than 110,000 minivans in the first six months of this year.
Last year, Hyundai Motor Co. offered to take back vehicles under certain conditions if customers lost their jobs. GM and Ford Motor Co. later offered to make car payments to buyers who lost their jobs.