Is Chrysler gaining market share by increasing their sub-prime sales?

[XDCX]

I read an interesting article in The Detroit Free Press that was overwhelmingly positive toward Chrysler and commented that Chrysler's increased sales performance was mostly driven by improvements in vehicle quality and better management.

Here's a link to the report - click here

Part of the report that caught my attention was a statement from Edmunds.com indicating that some of Chrysler's sales gains may be due to a higher portion of their sales coming from sub-prime customers. Here's an excerpt from the report:

There's also evidence that Chrysler is pursuing buyers with lower credit scores than most of its rivals, said Jessica Caldwell, analyst for Edmunds.com. She credits Chrysler for seeing the opportunity.

"If you are one of the few people in that business ... all of the sudden you have opened up yourself to a lot of new customers," she said.

She said 1 of 5 Dodge buyers in April financed their loan with an interest rate of at least 10%. In contrast, just 1 of 10 Chevrolet buyers and an even-lower rate of Ford buyers paid 10% or more, an interest rate indicating a credit score of less than 700.

Maybe I'm a born skeptic, but is it possible that 20% of the retail Dodge buyers have a finance rate in excess of 10%?

Additionally, suggesting that customers with credit scores below 700 are paying 10% interest doesn't seem correct. Sub-650, maybe, but not sub-700.

Is your store selling more cars to sub-prime customers? Are you getting deals bought that your local GM and Ford store can't get done?

[chryslersrt8]

I know of a dealer in Chicago suburbs who have a Chrysler and import franchise. She claims that the average import buyer is 75-90 points higher than the average Chrysler buyer. Both stores in the same market.

$3000 and more rebates make it easier for below and subprime deals to happen vs. dealer cash.

[XDCX]

Originally Posted by chryslersrt8

I know of a dealer in Chicago suburbs who have a Chrysler and import franchise. She claims that the average import buyer is 75-90 points higher than the average Chrysler buyer. Both stores in the same market.

I wouldn't be surprised if that was the case across the country. I've always read that the demographic for most Toyota, Honda and Nissan stores is a younger customer, with a higher education, who earns more money. It would make sense that their credit scores would be higher too.

Originally Posted by chryslersrt8

$3000 and more rebates make it easier for below and subprime deals to happen vs. dealer cash.

That's a great point. If there's more "money on the hood" of the Dodge truck versus the Ford or Chevrolet then it's going to be easier for the Dodge dealer to structure a deal for a customer who may have some credit challenges.

That makes sense - it's not like Ally is going to buy deeper for Dodge than they are for Chevrolet, it's based on deal structure.

The irony is GM seems to be entering a phase of "hibernation" where management is willing to give up market share to control incentives and Chrysler's doing the opposite.