Car manufacturers are forced to engage in an incentive war as midsize car sales continue to drop, according to Chrysler brand head Al Gardner. As a result, profits are declining in this 16-vehicle segment, which includes the Toyota Camry, Honda Accord, Ford Fusion. This affects even the redesigned models. During the first half of 2015, the midsize car segment posted 3.4% lower sales than the year-ago period.
Meanwhile, midsize crossover sales have grown by 3.6% and midsize SUV sales have gone up by 23%. Gardner said that because of competition woes, no car company will be able to meet profit targets. Sales of the Chrysler 200 in the first half of the year have more than doubled. However, it is being compared to last year’s first half when the previous model was in the sell-down period.
Gardner explained that if the segment is down, everybody strives to increase their share and this makes them throw big incentives at potential customers. He said that he doesn’t expect to lose money on the Chrysler 200 but the rest of the segment is pressured to raise incentives when a new car such as the Hyundai Sonata is immediately priced with low APR and cash on the hood.
A week ago, Hyundai offered a $1,750 cash incentive with its base 2015 Hyundai Sonata, with a sticker of $21,975. Edmunds.com revealed that a similar base 2015 Chrysler 200, with a sticker price of $22,990, came with incentives of as much as $2,500.
Shipping costs are included in these two price tags. Gardner said that even as the 200’s sales are increasing, its volume can still grow. He said that the 200 has “everything going for it.”
He believes that if more people enter its showrooms or look at its websites to check out the 200, they will find out how great this car is and Chrysler will “win this game.”