DaimlerChrysler Warns Dealers About PT Cruiser Supply

D E T R O I T, Nov. 16, 2000 -- DaimlerChrysler AG has warned its dealers that itcan’t build enough 2001 Chrysler PT Cruisers to meet all the orders customers have made.

An undetermined number of people who have ordered one of theretro-styled hatchbacks — some of whom paid hundreds of dollars asa deposit — might have to wait until the middle of next year to getone and pay next year’s prices.

Difficult Road Ahead?The automaker’s inability to keep up with demand for PT Cruiserscould damage relations with buyers Chrysler was hoping would berepeat customers in years to come. It also could mar what has beenits one unqualified success in a year of turbulence.

After two years of trying to make its trans-Atlantic merger work, DaimlerChrysler is still two companies divided byan ocean of troubles. With Chrysler president Jim Holden due to be replaced withcommercial vehicle director Dieter Zetsche on Friday (see sidebar below), the vaunted merger of equals enters another time of doubt.

U.S. workers areuncertain what the new regime will bring, with distrust stirred bystatements from DaimlerChrysler’s chairman that he never intended amerger of equals. And, Chrysler’s performance hasn’t metDaimlerChrysler’s expectations.

Issuing the WarningDaimlerChrysler warned dealers of the shortfall in a memo sentearlier this month, saying it would tell dealers by Dec. 1 how many2001 PT Cruisers they would get through summer of 2001 “to assistwith managing customer expectations.” The memo said customerswhose orders are not built before then would be charged whateverprice the 2002 model carries.

The PT Cruiser factory in Toluca, Mexico, will build about120,000 PT Cruisers this model year, with 20,000 slated for exportto foreign markets. In August, DaimlerChrysler said it already had100,000 orders.

The company also has ordered hundreds of U.S. executives leasingPT Cruisers under a corporate plan to give them up for sale todealers as slightly used “program cars,” and barred executivesfrom leasing new PT Cruisers.

DaimlerChrysler spokesman Dominick Infante said he could notestimate how many customers with orders might not get a PT Cruiser,or how many orders the company has in its system now.

“There’s a limit to what we can build, and that’s the issuewe’re facing,” Infante said. “We realize there are more peoplewho want PTs than we can build.”

Trying to Keep UpTo help meet demand, the company is ramping up production at aplant in Austria and trying to increase output at Toluca.

Infante said it would be up to dealers to explain that ordersare not filled on a first-come, first-served basis. DaimlerChryslerallots PT Cruisers based mainly on a dealership’s past record ofChrysler sales — a common auto industry practice. Dealers who sellmore Chryslers and sell their allotments faster get more vehicles.

Some customer complained that system seemed arbitrary.

“It has been difficult knowing there are tens of thousands ofpeople driving their car for several months knowing they orderedseveral months after I did,” said Pat Corkery, a stockbroker inAnchorage, Alaska, who ordered a PT in February and is set toreceive one in January. “There’s no logical explanation for anallocation system that delivers cars to some people in 10 weeks andsome in 10 months.”

Surprise SuccessThe PT Cruiser was aimed at luring a new class of buyers toChrysler, especially younger owners or import buyers who had notconsidered buying a Chrysler in the past. It has provided a welcomebit of good news for the Chrysler unit, which has suffered in afiercely competitive market. The unit posted a loss of $512 millionin the third quarter, and reports have emerged that the head of theChrysler division will be ousted Friday.

But the model’s popularity appeared to catch DaimlerChryslercompletely off guard. Buyers have formed owners’ clubs and spawneda small industry in add-ons.

Some customers follow their orderthrough the company’s computer system, into the build schedule andeven track the rail cars and truck transports that carry PTCruisers from the factory to their dealership.

But the backlog in orders has tempered the enthusiasm of somewould-be customers.

Losing customersJames Vernon, an aircraft mechanic from Indianapolis, orderedhis PT Cruiser on March 7. Judy Goering, a planner for a utilitycompany in Nebraska City, Neb., ordered her PT Cruiser on April 4.Neither has been told when their orders would be built.

Vernon put down a $500 deposit to hold his order, and said beingtold it wouldn’t be delivered until next year — and at a differentprice — would make him rethink the deal.

“I would probably tell them I would like my deposit back, and Iwould go to another manufacturer,” he said. “To me, that’sinexcusable.”

Goering was told she would get a PT Cruiser in June or July, butthe deadline has slipped every month since then. If Goering can’tget a 2001, “I might cancel my order, and I’ll never buy aDaimlerChrysler product again,” she said.

Dealers say the PT Cruiser is still selling well, but hopecustomers will forgive the hassle of getting one. Alan Helfman,general manager of River Oaks Chrysler-Plymouth Jeep in Houstonsaid he had about 300 orders for PT Cruisers, and knew severalother dealers with long waiting lists.

Helfman said telling customers that their PT Cruisers wouldn’tarrive until the middle of next year might cause a fewcancellations, but not a flood.

“I’m hoping a lot of people will stay with me, because if worsecomes to worst they’ll get a 2002,” he said. As for having a carthat sells itself, he adds, “Every squirrel deserves to have anacorn once in a while.”