Chrysler: 6-year Loan Effort to Boost PT Cruiser Sales

AUBURN HILLS, Mich. January 27, 2003; Jeff Green writing for Bloomberg reported that DaimlerChrysler AG's Chrysler is trying to lure younger buyers for its PT Cruiser with six-year loans that lower monthly payments and with art and music shows after the sport-utility vehicle's sales fell in 2002.

The 3.9 percent loans were added this month as an alternative to $2,500 rebates already offered in all U.S. states except California. The invitation-only shows will be in Los Angeles, San Francisco, Miami, Chicago, New York and Austin, Texas, said Pamela Niekamp, senior brand manager for the PT Cruiser.

Chrysler, the third-largest U.S. automaker, wants more under-40 customers for the PT Cruiser, whose average buyer is 53 years old, Niekamp said. The 1940s-style vehicle attracted 80,000 orders in two months after it debuted in 2000. U.S. sales last year fell 4.5 percent to 138,260, as Chrysler had a 3 percent drop.

"The 72-month loans are a bigger risk because more people default on them," said Art Spinella, president of CNW Marketing, which surveys vehicle buyers. "It lets more people buy the cars but it's riskier."

Five years had been the longest discount loan term Chrysler offered on the PT Cruiser. The Auburn Hills, Michigan-based automaker also offers six-year loans on some minivan models.

A $17,040 PT Cruiser with a six-year loan at 3.9 percent interest would have a monthly payment of $265.82, compared with a $305.43 payment for a 60-month loan at the 2.9 percent rate the automaker offers for that term, according to the Web site bankrate.com. The interest cost on the longer loan would be $2,099, or $813 more than with the five-year term.

The automaker will have to work harder to sell PT Cruisers because fewer people are interested in the sport-utility, Spinella said. The rate of vehicles shoppers who have the PT Cruiser on their list has fallen to 1.1 percent now from about 2.5 percent in 2000, he said.

Similar declines occurred after the initial popularity of other distinctively styled vehicles such as Volkswagen AG's Beetle and Porsche AG's Boxster, he said.

Chrysler expects PT Cruiser sales to improve with the addition this week of a manual-transmission, turbocharged version, Niekamp said in an interview. The sport-utility has a price range of $17,040 to $27,530.

PT Cruiser sales should rise to 141,773 this year and 149,372 in 2004 with the turbo model and the introduction of a convertible next year, said Rebecca Lindland, a forecaster at Global Insight Inc. Without the new versions, sales would fall, she said.

Chrysler has said it will report a "slight" operating profit for 2002 after a $1.9 billion loss the previous year. The automaker has set a goal of selling 1 million more cars and trucks annually by 2010. Chrysler is introducing 11 all-new models and 10 redesigns of existing vehicles in the next three years as part of that effort, Chief Executive Officer Dieter Zetsche has said.