• by Karl Greenberg , December 4, 2006

Chrysler Group launched its largest direct-mail effort ever to try to spur sales after a lackluster year that has left it with half a million unsold vehicles.

The automaker is sending coupons worth $1,000 to 3.4 million current Chrysler, Jeep and Dodge owners, and owners of competitive vehicles, to back a new round of incentives on most 2006 and 2007-model vehicles. Excluded are recent launches like the 2007 Chrysler Sebring, and Dodge Nitro, and limited-edition vehicles like Dodge Viper.

The offer, which is an add-on to current dealer offers, runs through Jan. 2.

In addition, reports are that after announcing year-to-date sales are down 8 percent, Chrysler on Friday began offering $2,500 to $7,000 in dealer cash, which dealers can use to lure customers or keep as profit. It adds up to $500 million worth of cash bonuses to its 3,400 dealers.

Chrysler is spending far more this quarter than other automakers on incentives. Jesse Toprak, an analyst with Edmunds.com, said Chrysler is averaging $4,200 per vehicle, while GM is spent on average $2,500 per vehicle, and Ford $3,300 in November. He said the industry average was $2,200 last month, with Honda and Toyota spending only $380 and $800 on incentives, respectively.

"General Motors has backed away from these kinds of blanket incentives, but for existing product lines, already in dealerships, it's difficult to do that," Toprak said. Last month, GM mailed a private offer to pay off up to $2,000 on remaining car leases of Ford, Toyota and other competitor leasers, if they would buy or lease a 2006 or 2007 GM vehicle.

Kevin McCormick, Chrysler spokesperson, said the latest effort is not a reprise of an incentive campaign launched in November, offering more than $4,000 in discounts. "This is direct-only, and only to targeted customers. The recent push was more of a general incentive initiative."

The November push seems to have worked, at least in the short term. Analysts expected Chrysler Group to see sales drop in November after an October in which sales fell more than 6.5 percent. Chrysler Group instead posted a 2.9 percent sales increase to 164,556 last month.

Chrysler credits an aggressive product launch schedule, which included 10 new vehicles this year--including 2007 Sebring, Dodge Magnum, Nitro, and Jeep Patriot.