JEREMY CATO and MICHAEL VAUGHAN
Globe and Mail Update Last updated on Monday, Mar. 30, 2009 03:37PM EDT
Cato: There is a very, very simple reason why Chrysler Canada has increased sales every month for the last 21 months.
Vaughan: It's called pricing.
Cato: You bet. Last month Chrysler Canada's sales were up 7.2 per cent because month after month the company has aggressively adjusted prices to keep pace with the competition and stay on top of what's been going on with the value of the loonie.
Vaughan: Chrysler jumped in fast with price cuts as soon as soon the Canadian dollar approached par with the American greenback. Chrysler had learned a painful lesson not so long ago when they had parking lots the size of Saskatchewan filled with unsold Chryslers and Dodges. The private equity boys who bought Chrysler with borrowed money don't want to finance that.
Cato: They have to conserve cash. Just days ago, to move some more metal, Chrysler slashed the price of the Sebring convertible by $7,000 to $19,999 for the starter model. The Jeep Wrangler, the base model ragtop, is down to a base price of $17,999.
Vaughan: Appeals to the miser in me.
Cato: Miser in you? The miser is you.
I like those deals but Chrysler really has something happening with the 2009 Dodge Journey station wag…uh, crossover wagon.
Vaughan: I was very surprised to see the base model start at $19,995. The Journey has about an $8,000 price advantage over the base Honda CR-V at $27,790.
Cato: That's huge. The CR-V is a great crossover but I don't know that it's eight thousand dollars better. Eight thousand dollars A lot of money.
Vaughan: You may be in doubt, but not me. If I were shopping for a wagon I'd put the Journey at the top of my list. And I'd buy the very cheapest one possible.
Cato: Cheap. Yes, you are cheap.
Vaughan: Why spend more? The $20,000 Journey, the four-cylinder model, with front-wheel drive, air conditioning, power door locks and windows and seating for five.
Do I need Sirius satellite radio for $250? No.
Do I need a video screen in the back seat for $1,175? No.
Do I need to spend an extra $1,075 for a third-row seat that folds into the floor? No, no, no.
Cato: Perhaps you can't be convinced to get a few extras, but you're in the minority. Look at the Power Information Data below. The average transaction price for the Journey is nearly $27,000. Lots of people are spending a little extra for the six-cylinder version and a few options.
Vaughan: Don't need the six and don't need the extras. The four-banger gets better fuel economy, so I save a little there, too.
Cato: And some buyers are spending a little more for all-wheel drive.
Vaughan: Don't need it. Just use winter tires in the cold months and you'll be fine with front-wheel drive.
Cato: We agree that the Journey is a deal, but shoppers should be warned, in particular, about the interior. It looks okay, but it's loaded with hard plastic and fairly inexpensive materials.
Vaughan: Cato, this is a family vehicle, children throw up in it. It doesn't need fancy materials and the people buying the Journey aren't worried about having them.
They want it affordable and practical, period.
Cato: I do want to warn shoppers about what might happen when they try to negotiate an even better price at the dealer.
Chrysler Canada is paying for those low prices by being very aggressive with dealer margins. Don't expect dealers to move much on price; they don't have much room to move. For instance, the dealer margin on that base Journey is less than $1,000 or about five per cent.
Vaughan: Dealers who move too much on price won't be in business for long.
Cato: This brings me to a warning you'll appreciate. With such small margins, Chrysler sales people are going to push extras and options to pad the bottom line.
Vaughan: Extras and options? Resist them all. Just say no. As I said, don't need 'em.
Cato: Oh, you are a cheapskate.
Vaughan: Frugal, my boy, frugal.
2009 Dodge Journey
Buyer's Age Range:
- 16-34 years: 16.7%
- 35-54 years: 53.9%
- 55+ years: 29.4%
Gender ratio:
- Female: 33.6%
- Male: 66.4%
Type of sale:
- Cash/non-dealer financing: 12.1%
- Finance: 20.9%
- Lease: 66.9%
Most popular colours
- Silver
- Black
- Red
Vehicle price: $26,802 (does not include taxes, license or title fees)
Days to turn: 17
Trade ins: 29.2% (does not include lease returns)
Top trade in:
- Dodge Caravan
Average monthly payments: (includes PST & GST)
- Lease (24 month term): $457
- Lease (48 month term): $520
- Finance (60 month term): $528
Source: Power Information Network
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