Chrysler Pre and Post-Bankruptcy Analysis

Last week, former Chrysler CEO Bob Nardeli made a statement that the Obama administration didn’t need to give control of Chrysler to Fiat SpA in order to save it in 2009, only to back off it days later.  While we will never know what the condition of Chrysler would be today if Cerberus Capital Management LP was still in charge, we can examine how consumer demand for Chrysler, Dodge, and Jeep has changed after Fiat was given control of the struggling automaker.

Demand is a key data point to examine as it is a crucial precursor of sales.  Given its importance, Compete compared demand performance of the Chrysler, Dodge, and Jeep makes from May, 2007 (when Daimler AG agreed to sell 80.1 percent of Chrysler to Cerberus) through September, 2011.  The comparison leverages Compete’s proprietary in-market automotive shopper metrics, which are based on unique consumers (i.e., no double-counting of consumers doing the same activity more than once in the same month). Those metrics in turn leverage Compete’s patented normalization technology.

Pre-Bankruptcy Make Shopper Volume: From May 2007 through March 2009 demand for Chrysler and Jeep steadily declined (down 14% and 28%, respectively) to 92,000 shoppers each (see chart below).  That is, prior to filing for bankruptcy, demand for Chrysler and Jeep had declined significantly under the watch of Cerberus.

Conversely, during the same timeframe, demand for Dodge increased by 13%.  However, it is important to note that demand for several of Dodge’s models (such as the Ram truck series) is largely dependent on the volatility of gas prices.  For example, the average gas price per gallon in July, 2008 was $4.111 and had dropped to $2.01 by March, 2009.  During that time period, Dodge demand increased by 59%.

1. Source: DOE, Energy Information Administration

Post-Bankruptcy Make Shopper Volume: Since the U.S. Supreme Court cleared the way for the sale of Chrysler LLC to Fiat in June 2009 demand has increased significantly for all three makes.  That is, from July 2009 to present (through September 2011) demand for Chrysler, Jeep, and Dodge increased significantly (up 37%, 26%, and 30%, respectively).  Furthermore, if we solely look at demand change since December, 2010, Chrysler and Dodge rank first and third among all non-luxury makes in the industry by increasing 103% and 48%, respectively (see chart below).

Post-Bankruptcy Model Shopper Volume: To understand demand changes at a make level it is crucial to analyze what model(s) are having the greatest impact.  As a result, the charts below profile demand performance of Chrysler and Dodge’s top demand performing models since December, 2010.

Chrysler demand has been driven by its two most popular models, the 300 and 200.  Since December the 300 has increased by 156% to 53,000 shoppers, while the 200 increased to 43,000 shoppers since its widely acclaimed Super Bowl ad featuring Eminem with the tagline “Imported from Detroit”.

In comparison, Dodge’s performance since December was not primarily driven by its signature model, the Ram 1500.  That is, the Durango, Challenger, and Charger (up 46%, 74%, and 55%, respectively) substantially outperformed the Ram 1500’s increase of only 12%.  The rise of these models has allowed Dodge demand to become more stable from month to month as it is less dependent on the price of gas.

Looking Ahead:

Based on demand performance post bankruptcy it would be difficult to argue that Fiat has not made significant progress with the Chrysler, Dodge, and Jeep makes.  However, there is still room for improvement if Fiat plans to restore demand for the three makes to pre-recession levels and increase Share of Market Interest (SMI).   As Compete continues to track Fiat’s performance we’ll be watching for the following:

  • Will recent demand gains by Chrysler and Dodge continue to outpace rivals resulting in SMI gains?
  • Will Fiat increase ad spend for Jeep models to spur demand growth similar to Chrysler and Dodge?
  • How will 200 and 300’s long-term demand stability compare to segment rivals?
  • Will demand for Dodge continue to be driven by multiple models, resulting in a stabilization of demand after years of volatility?
  • Will upcoming model launches be additive to demand or will they simply share shoppers among existing models?

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About Tom Lucido:
Tom Lucido is a Sr. Associate at Compete. At Compete, Tom is responsible for client deliverable management for the automotive team. Before Tom joined the Compete Team he worked at J.D. Power and Associates on the production and delivery of Auto Finance and Banking customer satisfaction studies and advisory projects. Connect with Tom on LinkedIn

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  1. Tracy Wharton

    How do you define “shoppers” in your data? Are shoppers people who have actually purchased a car? Where was the “shopping” taking place? Online or at a dealership? Also how do you define “demand” here? Thanks

    Reply

    • Tom Lucido

      Hi Tracy,

      Thanks for your interest in the article. I have included a few bullet points below regarding the shopper (i.e., demand data) used in the article.
      In short, demand is based to observed online shopping behavior across 30+ 3rd Party online automotive sites.

      Market Shopper Counts – The number of unique in-market new-vehicle shopppers across all makes and models by month, with no double counting of consumers that shopped on any of the 30+ third-party auto sites

      Brand Shopper Counts – The subset of all Market Shopper Counts that shopped at least one model for each included brand by month as measured by the number of unique shoppers

      Background on Compete Shopper Volume:
      – Eliminates OEM site bias and provides better consistency across makes and models
      – Data aggregated from multiple sites to remove ad and regional bias of any one site
      – Shopping behavior based on lower funnel shopping activities on key shopping areas of each site
      – Exclude those that were redirected to shopping areas as well as pop-up victims not intending to visit those shopping areas
      – Shopper definition has remained constant over time across models and brands allowing for comparisons over time for trends and correlations
      – Compete has 8+ years of shopper history based on this consistent definition

      Thanks again!

      Tom Lucido
      tlucido@compete.com

      Reply