Vowing ”one last” fight with the Japanese, Chrysler Corp. said Thursday it will reduce the base price of its subcompact Dodge Omni and Plymouth Horizon by $710, add $684 in options free and begin selling ”America” models with a base price of $5,499 on May 15.
”We hope people will see this as a big ice cream cone for a nickel,”
said Chrysler Chairman Lee Iacocca.
”But the story here is more than a $5,499 sticker,” Iacocca told a nationwide press conference via telephone and satellite link-ups.
Iacocca said the reason the automaker will be able to cut the sticker price is that ”everyone has come to the party,” agreeing to a series of production cost savings at Chrysler`s plant in Belvidere, Ill, near Rockford. Cost-saving actions range from a 10 percent price reduction by parts suppliers to a $500,000 grant from the State of Illinois to train Belvidere`s 3,000 assembly-line workers in ”high velocity” production techniques, he said.
The state previously agreed to provide Chrysler with job-training funds when Belvidere is converted from production of the subcompact Omni and Horizon to a new, full-size, C-body car line a year from now.
The training funds were an inducement for Chrysler to continue building cars at Belvidere after threatening last year to abandon the plant when it halted Omni/Horizon output at the end of the 1986 model run. Chrysler said that without a high-tech conversion of Belvidere, it couldn`t afford to build cars there.
Jim Bray, a spokesman for Gov. James Thompson`s office, said a partial industrial training grant was awarded early ”so that Chrysler could lower its cost without having to either offer a stripped-down Omni/Horizon, or decide to shut the plant until the new car is built there in about a year.”
Iacocca said costs will be cut by ”decomplexing” the cars of about 720 current options and accessory combinations. The models, which Chrysler has dubbed ”America,” will be offered only in 4-door versions with a 2.2-liter, 4-cylinder engine; 5-speed manual transmission; rear defroster; rear wiper/
washer; and special wheels and instrumentation.
There will be two option packages, one with such items added to the base model as power steering, AM/FM stereo and upgraded trim. That car will start at $5,999. The other package features the same items plus automatic transmission and will start at $6,349.
”With the enormous cost advantages the foreign cars enjoy, small-car production in America may well be doomed forever,” Iacocca said. ”But before we bury the American small car forever, we`re going to give it one more chance for life at Chrysler.
”This is an experiment, a test of our ability to profitably produce a subcompact in America and keep the jobs those cars create in America. And it`s a test if American people prefer to buy an American car if the price is right and the product value is there,” he said.
”We aren`t going to abandon the low end of the market and the jobs that go with it without a fight,” he added. ”If small-car production is doomed, at least you can say good old Chrysler fought to the end.
”We aren`t going to be martyrs, though. This isn`t a fire sale or a move to clear out the lots. We`ll make some money at $5,499 or we wouldn`t do it,” he said. But, he conceded, ”This is one time when we have to make that money on volume. We`ve got to sell the plant out, we have to build and sell 232,000 cars over the next year and 170,000 of those have to be Americas.
”We believe this is the biggest model-to-model price cut in the history of the auto industry,” Iacocca said of the America models, which will be sold as 1987s.
”They will be the lowest-priced American cars you can buy and lower than any comparable Japanese cars,” he said. ”And we aren`t playing `find the gimmick.` Most price reductions have been with incentives or rebates, but this is an actual price reduction. The last time we sold a product under $5,500 was the Omni/Horizon in 1982.”
To prepare for the switch to `87 America models, Iacocca said Chrysler will offer buyers of the 1986 models the choice of 7.5 percent discount financing or a $500 rebate through May 14.
Meanwhile, U.S. automakers reported that cut-rate deals helped push car sales in early February 4.3 percent above year-earlier levels, with only Chrysler Corp. among the Big Three reporting a decline.
The seven companies making cars in the United States said they sold 172,373 cars in eight selling days Feb. 1-10, up from 165,221 a year earlier.
