Chrysler Offers Dealers Cash to Take Cars

Chrysler recently offered $1,000 for every car they sell over the next two months if the dealer doesn’t cut its March vehicle order and accepts cars from the automakers bank of overbuilds. Chrysler is offering this to dealers due to sluggish sales of pickup trucks and SUV’s. There are costs and benefits for both the dealers and the Chrysler corporation. Although Chrysler’s offer will cost a thousand extra dollars for each car, they are concerned about their image on Wall Street if they were to stop production at the plants. Essentially, Chrysler would be “saving face” if they were to keep the production up, which is the benefit of this extra $1,000. For the dealers, with interest rates rising it is costing them more to hold inventory and this cuts into their profits. The obvious benefit would be the extra $1,000 on each car the specific dealer accepts. This is a prime example of how businesses, large and small, weigh the costs and benefits of all of their decisions.