In a dramatic attempt to spur stalled car sales, Chrysler Corp. will begin offering $400 rebates on most of its models beginning Saturday.
The company is expected to announce the rebates today. Area dealers were briefed on the plan yesterday.
The rebates will apply to all the company's 1979 cars, light trucks and vans, except for its popular Dodge Omni and Plymouth Horizon subcompacts and its Japanese import models.
Coming on top of dealer discounts announced last week that have allowed Chrysler dealers to trim their car prices, the rebates represent a bold bid by the nation's sputtering No. 3 automaker to sell off an inventory backlog of 80,000 cars and trucks and drive itself out of the financial pits.
Altogether, the discounts and rebates, plus a corporate promotion blitz, is expected to cost Chrysler more than $100 million this year, according to company officials. Chrysler recently finished a quarter in which it lost twice that much and reported the largest deficit in its history, prompting the firm to plead for federal assistance.
But Chrysler strategists are gambling the lower prices will add new life to car sales and also demonstrate that Chrysler is not about to quit.
"It shows Chrysler intends to stay in business," declared John Koons, owner of JKJ Chrysler-Plymouth in Alexandria, Va., in a remark representative of the enthusiastic favor with which the rebate plan is being greeted by many Chrysler dealers.
The new rebate plan will be a close copy of the one Chrysler hatched during the 1975 auto slump. The company is even going to use the same name for the 1979 program, calling it "Car Clearance Carnival II" and using baseball telecaster Joe Garagiola again as chief cheerleader.
The last time rebates were tried, they touched off a promotion war in the auto industry as General Motors and Ford both followed Chrysler's lead. The experience left many in the industry less than enthusiastic about rebates, for though they did spark a buying surge, it was in part by drawing on future sales.
This time Chrysler's rivals appear less anxious to follow suit. A spokesman for General Motors yesterday said the No. 1 automaker "had no plans" to introduce rebates.
At Ford, the indication was the same. Executive vice president William O. Bourke recalled the 1975 experience and said it had not been productive on the whole. "Our analysis showed they merely sucked the market forward," he said during a press conference.
But Chrysler dealers see the new rebates as adding momentum to a speed-up in sales that has begun within the last few weeks.
Sales have been up," said Jack Fitzgerald of Colonial Dodge in Rockville, who reported he has sold as many cars since mid-July as he had in the three previous months.
Chrysler has set no official cut-off date for the rebate program, but instead will monitor it closely at the start to gauge its success. The program's aim is to unload the company's swelled backlog of $700 million worth of vehicles, many of them mid- and large-sized models spurned by energy-conscious consumers in favor of smaller models.
But even before the dealers can draw down the corporate stockpile, they will have to clear their own stuffed lots whose huge inventories totaled 350,000 at the start of August.
The cost of carrying these vehicles has been one of the biggest drains on the ailing company. Chrysler reported a record $260.9 million loss for the first half of this year.
To overcome a severe short term cash pinch, Chrysler has taken a number of drastic measures. It has laid off thousands of workers, frozen wages and is delaying introduction of 1980 models until Oct. 12, in addition to petitioning the government for aid.
In further layoffs announced yesterday, Chrysler gave indefinite furloughs to 2,556 workers at five plants in the United States and Canada. That will bring Chrysler's layoff total to 24,950 in the United States and 1,985 in Canada, out of a total blue collar work force of 110,000, according to company figures.