Chrysler Predicts Slowing Sales

04/05/96

Reuters reported that Robert Eaton, Chairman of Chrysler Corporation, told reporters at the New York Auto Show that the strong automobile sales that Chrysler exhibited during the first quarter of this year is not sustainable throughout the rest of the year. Chrysler predicts that industry-wide sales of cars and trucks in 1996 will fall somewhere between the 15.1 million sold last year and the 15.4 sold the year before. All this in spite of the fact that the seasonally adjusted annual rate for March will hit somewhere between 15.9 and 16 million vehicles for the industry.

Eaton complained that the national economy was not strong enough to sustain currently strong sales and that Chrysler's profits for the year hinged on whether or not the Federal Government decides to cut interest rates for the fourth time since mid 1995. The Federal Reserve's Open Market Committee met in March but held interest rates steady. They will not meet again until May. Eaton said that automobile sales will slow unless the Federal Reserve cuts interest rates.

Eaton said that Chrysler is confident that it will sell all the minivans it can produce (700,000), even if their sales slow, and despite increased competition from three new GM minivans.

Chrysler's confidence in their ability to compete with GM notwithstanding, Eaton commented on up-coming negotiations with the UAW by asserting Chrysler's need to be able to subcontract out union work. He also said that the three year national contract period is too short.

By all signs Chrysler will continue to try and sell non-core assets like its rental car operations and Chrysler Technologies, Inc., its defense electronics unit.

Paul Dever -- The Auto Channel