Chrysler has stopped allowing employees to share their employee discount price on the purchase or lease of a new vehicle with friends and extended family, the Detroit Free Press has learned. The discount typically is about 5% below the factory invoice price.
"Chrysler LLC continually monitors employee pricing in assessing its competitive position within the marketplace, and the company adjusts accordingly," spokeswoman Beverly Thacker said in explaining why the program was cut.
She stressed that the employee discount program continues for employees and retirees, who are allowed six discounts for themselves and immediate family members each year.
The move will come as a culture shock in the Detroit area. Using friends' discounts on new U.S. vehicles is ingrained in the local car-buying landscape, where thousands of people are tied to the auto industry. Most TV and newspaper ads in the area routinely list the discounted prices.
Chrysler's Employee Choice Program allowed employees and retirees to give the same discount, plus a $200 fee, to a friend, extended family member or acquaintance. They were allowed to give one discount a year, though last year, they could do it twice. The company said the discount was used 60,000 times in 2007.
The program began in October 2004 and was terminated in January. Thacker said the discount ranged from 4% to 6%, but most received a 5% discount.
After canceling the program, Chrysler mailed former Employee Choice customers a $1,000 certificate toward the purchase of a new Chrysler-brand vehicle, Thacker said.
Chrysler declined to quantify the expected savings from the change.
Chrysler employees still can help friends get a deal on a new Chrysler vehicle. Under its Friends Program, friends, neighbors and extended family members are given a preferred price — up to 1% below factory invoice plus a $75 administration fee — toward the purchase or lease of select models.
Jessica Caldwell, an industry analyst with Edmunds, said the move to cut the friends discount is another example of Chrysler's efforts to save money. While the 60,000 times it was used last year "doesn't seem like a big number," Caldwell said, "it seems like they are counting every penny these days."
The automaker's internal numbers indicate that Chrysler lost $2.9 billion last year on operations and restructuring costs, the Free Press has reported.
Carl Galeana, owner of Galeana's Van Dyke Dodge in Warren, Mich., said the elimination of the discount sharing has not affected his sales. Most of his sales involve a company discount, he said.
"I've always felt it was an artificial stimulus," Galeana said. "Don't get me wrong, it's a good thing to have, but at some point, we have to get along without it."
Many workers interviewed outside Chrysler's truck assembly plant in Warren said they were unaware of the change to the popular program.
April Lynch, 42, figured the change would become controversial as more people heard about it and saw it as a lost benefit: "I think they need to give us something."
Since Chrysler came under private ownership in August, its employees have faced many other changes. Last week, Chrysler Chief Executive Bob Nardelli announced that nearly all parts of the automaker would shut down for two weeks in July.