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Chrysler's Zetsche Says It May Be Difficult to Cut Back Incentives

March 26, 2002

The head of DaimlerChrysler AG's Chrysler unit would like to scale back incentives offered to new vehicle customers, but said competition may not allow the automaker to do that, according to an Associated Press report.

"We certainly think it would make sense to get a little bit more modest with incentives but we will see," said Dieter Zetsche, Chrysler Group president and CEO, speaking to reporters at the New York Stock Exchange March 25. "But of course we are affected by competition as well and therefore it depends on all three of us and other players to see how incentives will further develop."

Zetsche's company received an award at the show for the performance of its stock during 2001. His comments came the same day Ford Motor Co. chief financial officer Martin Inglis said the world's No. 2 automaker is backing off from comments made last week by chairman and CEO Bill Ford that it would match General Motors Corp.'s incentives dollar for dollar.

Zetsche has said several times since the incentive battles began that he had little taste for the costly promotions and preferred his comnpany's seven-year, 100,000 mile powertrain warranty. He feels high incentives cheapen the value of the vehicle and so Chrysler

sought to market its cars and trucks as "aspirational" purchases, hoping customers would desire its products regardless of incentives. But Chrysler found it needed to continue to offer cash incentives and low rate

financing to remain competitive, although at lower levels than its U.S. rivals, according to the Detroit News.

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