Chrysler Group LLC may have reported its 32nd consecutive month of year-over-year sales gains in November, but sales of its all-new 2013 Dodge Dart were down almost 18 percent, raising concern about a vehicle that has so much riding on it.
The Dart, which went on sale in August, is aimed squarely at the heart of the fast-growing compact car segment — an arena in which Chrysler has not fielded a serious contender since it pulled the plug on the Neon back in 2005. Based on the acclaimed Alfa Romeo Giulietta, it also represents the first real offspring of the marriage between Chrysler and Italy's Fiat SpA.
Last month, Chrysler sold just 4,489 Darts, almost a thousand less than it sold in October. That is significant, because the industry as a whole reported its strongest sales in nearly five years on Monday. And that has some analysts worried.
"It is of concern, because the small-car segment is doing very well right now — and they are missing the boat on that," said Michelle Krebs of Edmunds.com. "Their numbers should be higher. But they are establishing themselves in a space they haven't played in for some time."
Fiat-Chrysler CEO Sergio Marchionne has left little doubt how important the Dart is to Chrysler's turnaround.
"Our future hangs on how well we do here," he said after meeting with workers at the factory in Belividere, Ill., where the new car was being readied in May. "I can probably get one car wrong. Of all the cars I can get wrong, it ain't this one. This one is too visible, it's too large, it's got too much embedded into it to go wrong."
But November's results suggest the Dart may not quite be hitting the mark. At least, not the models on dealer lots.
One of the big things Marchionne touted about the Dart was its 100,000 buildable combinations. That level of hyper-customization is central to his strategy for Chrysler. But special-ordering a Dart can take months, and most American consumers are unwilling to wait that long. So the company and its dealers still need to guess which combinations of features and options will be most appealing.
"We're still very much in the ramp-up mode for the Dart. We're still trying to get the right mix out there," said Dodge Brand President Reid Bigland. "But we like the spot we're in."
That is because the Dart is selling for a lot more than its competitors.
Last month, the average price paid for a Dart after incentives and other special offers was $22,012. Bigland said that is about $2,600 more than the average for compact cars. He suggested many of Chrysler's competitors are boosting demand for their vehicles by offering big incentives. That undercuts profitability.
Bigland said that is precisely the sort of short-term thinking that led Chrysler to federal bankruptcy court in 2009, and it is something the born-again Chrysler wants to avoid.
"We're not emptying the piggy bank," he said, adding that Chrysler has only been offering $500 in cash to new customers.
That might be part of the problem, Krebs said, suggesting that Chrysler think about putting more money on the hood. That is what Ford Motor Co. did when its new compact Ford Focus got off to a rocky launch last year. And it worked. Focus sales are up 38.3 percent year-to-date; they were up 56 percent month-over-month in November.
Rethinking the advertising might also help, Krebs said.
The Dart's how-to ads are fun to watch and have been a hit with viewers, but Krebs said they do not talk enough about the car.
"They're great, but I wonder if the actual Dart gets lost in the shuffle," she said. "They need to go back to the drawing board with marketing and maybe do some incentives."
Bigland said Chrysler is upping the incentives on the Dart as part of its year-end sale, but only by $250.
Analyst Jim Hall of 2953 Analytics LLP also has concerns about the Dart ads, but he is less worried about the pace of sales. He says Chrysler's previous owners — Daimler AG and Cerberus Capital Management LP — failed to invest in a credible replacement for the Neon even as the market was shifting in favor of small cars.
The Dart's predecessor, the Dodge Caliber, was one of the most reviled vehicles in recent memory and convinced most consumers to look elsewhere for small cars.
"The brand has zero consideration in the compact segment because of the Caliber, so every vehicle they sell over the Caliber is a success," Hall said. "Sergio is paying for the idiocy of Daimler and Cerberus. And there will be more of those payments that Sergio will have to make over the next few years."
But he said Marchionne and his team have realistic expectations for the Dart.
"Their forecasting was not gigantic for this car," Hall said. "It was not the sort of numbers that Ford would wave around. They knew this was going to be an uphill battle."
The Dart, which went on sale in August, is aimed squarely at the heart of the fast-growing compact car segment — an arena in which Chrysler has not fielded a serious contender since it pulled the plug on the Neon back in 2005. Based on the acclaimed Alfa Romeo Giulietta, it also represents the first real offspring of the marriage between Chrysler and Italy's Fiat SpA.
Last month, Chrysler sold just 4,489 Darts, almost a thousand less than it sold in October. That is significant, because the industry as a whole reported its strongest sales in nearly five years on Monday. And that has some analysts worried.
"It is of concern, because the small-car segment is doing very well right now — and they are missing the boat on that," said Michelle Krebs of Edmunds.com. "Their numbers should be higher. But they are establishing themselves in a space they haven't played in for some time."
Fiat-Chrysler CEO Sergio Marchionne has left little doubt how important the Dart is to Chrysler's turnaround.
"Our future hangs on how well we do here," he said after meeting with workers at the factory in Belividere, Ill., where the new car was being readied in May. "I can probably get one car wrong. Of all the cars I can get wrong, it ain't this one. This one is too visible, it's too large, it's got too much embedded into it to go wrong."
But November's results suggest the Dart may not quite be hitting the mark. At least, not the models on dealer lots.
One of the big things Marchionne touted about the Dart was its 100,000 buildable combinations. That level of hyper-customization is central to his strategy for Chrysler. But special-ordering a Dart can take months, and most American consumers are unwilling to wait that long. So the company and its dealers still need to guess which combinations of features and options will be most appealing.
"We're still very much in the ramp-up mode for the Dart. We're still trying to get the right mix out there," said Dodge Brand President Reid Bigland. "But we like the spot we're in."
That is because the Dart is selling for a lot more than its competitors.
Last month, the average price paid for a Dart after incentives and other special offers was $22,012. Bigland said that is about $2,600 more than the average for compact cars. He suggested many of Chrysler's competitors are boosting demand for their vehicles by offering big incentives. That undercuts profitability.
Bigland said that is precisely the sort of short-term thinking that led Chrysler to federal bankruptcy court in 2009, and it is something the born-again Chrysler wants to avoid.
"We're not emptying the piggy bank," he said, adding that Chrysler has only been offering $500 in cash to new customers.
That might be part of the problem, Krebs said, suggesting that Chrysler think about putting more money on the hood. That is what Ford Motor Co. did when its new compact Ford Focus got off to a rocky launch last year. And it worked. Focus sales are up 38.3 percent year-to-date; they were up 56 percent month-over-month in November.
Rethinking the advertising might also help, Krebs said.
The Dart's how-to ads are fun to watch and have been a hit with viewers, but Krebs said they do not talk enough about the car.
"They're great, but I wonder if the actual Dart gets lost in the shuffle," she said. "They need to go back to the drawing board with marketing and maybe do some incentives."
Bigland said Chrysler is upping the incentives on the Dart as part of its year-end sale, but only by $250.
Analyst Jim Hall of 2953 Analytics LLP also has concerns about the Dart ads, but he is less worried about the pace of sales. He says Chrysler's previous owners — Daimler AG and Cerberus Capital Management LP — failed to invest in a credible replacement for the Neon even as the market was shifting in favor of small cars.
The Dart's predecessor, the Dodge Caliber, was one of the most reviled vehicles in recent memory and convinced most consumers to look elsewhere for small cars.
"The brand has zero consideration in the compact segment because of the Caliber, so every vehicle they sell over the Caliber is a success," Hall said. "Sergio is paying for the idiocy of Daimler and Cerberus. And there will be more of those payments that Sergio will have to make over the next few years."
But he said Marchionne and his team have realistic expectations for the Dart.
"Their forecasting was not gigantic for this car," Hall said. "It was not the sort of numbers that Ford would wave around. They knew this was going to be an uphill battle."
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