Chrysler Canada Inc., taking advantage of the broad array of companies in the Cerberus Capital Management LP stable, has hooked up with Air Canada to extend its own employee discounts to those of the airline, opening a new frontier in automotive retailing in Canada.
It's believed to be the first time an auto maker in Canada has offered such discounts to a third-party company - in this case, 50,000 Air Canada employees and retirees - but the practice is likely to spread here if it becomes successful for Chrysler.
"Going out and targeting customers to their large rank-and-file employees and making them feel special is kind of the new frontier out there," Chrysler Canada president Reid Bigland said.
Cerberus, the giant U.S. private equity fund, owns about 80 per cent of Chrysler Canada's parent Chrysler LLC and about 52 per cent of the preferred shares of ACE Aviation Holdings Inc., parent of Air Canada.
The hookup between the auto maker and the airline is part of an aggressive push by Mr. Bigland to continue boosting his company's sales in Canada and strengthen its hold on second place in the sales rankings. The company grabbed that spot last year ahead of Ford Motor Co. of Canada Ltd. and behind General Motors of Canada Ltd. by posting 12 months of year-over-year sales increases, which gave it the biggest market-share gains of any auto maker in the Canadian market.
Other moves included being the first major auto maker in Canada to offer special discounts last year to bring prices closer to U.S. levels as the Canadian dollar soared, and last month's incentive campaign, which waived the delivery charge on new vehicle purchases.
Some 250 of the company's sales in December were made to Air Canada employees, Mr. Bigland said. Another 200 or so vehicles were bought by the airline's employees in January.
"I think that elevator is still at the ground floor when it comes to the true potential," he said.
The deal - Chrysler also has an arrangement with Petro-Canada to offer discounts to the oil company's employees - is another example of how the business of selling vehicles is being transformed.
The practice is common in Britain, a European auto industry source said, and is starting to spread into some of the premium brands.
"The retail world is changing and changing rapidly," said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont.
Mr. DesRosiers points to the third-party buying services offered by the Canadian Automobile Association and the Automobile Protection Association, which have deals with most auto makers; the growth of ownership groups that hold several outlets as the number of traditional family-owned dealerships declines; and the trend of new car dealers buying used car outlets and opening used car superstores.
"There's a lot of activity in this area," he said. "They're trying to figure out how to differentiate themselves with the consumer."
Mr. Bigland said leapfrogging "the traditional sales channel of factory to dealer, dealer to customer," means salespeople don't have to wait around in showrooms for customers to come to them.
The special section of the Chrysler Canada website aimed at Air Canada employees says a well-equipped Chrysler 300C sedan carries a manufacturer's suggested retail price of $46,495, but goes for $33,753 with the discount. That includes an extra $2,500 incentive called "Air Canada bonus cash." On the Dodge Grand Caravan minivan, which is the bestselling vehicle in the auto maker's lineup in Canada, the manufacturers suggested retail price is $27,945, but the employee discount of $1,939, a rebate of $1,500 and eliminating the delivery charge of $1,350 reduces the price to $23,156.
Although the discounts can represent more than 25 per cent of the price of the car in the case of the 300C, Mr. Bigland said Chrysler still makes a profit on such sales, although the margin is slimmer.