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Chrysler Offering Up To $6,000 In Incentives On 2009 Cars

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NEW YORK — Chrysler said Wednesday it is offering up to $6,000 worth of incentives on its 2009 cars and trucks as it races to emerge from bankruptcy protection and counter a prolonged U.S. sales slump.

The new incentives _ which come off prices negotiated with dealers _ are Chrysler LLC's latest push to keep customers coming into its showrooms. They replace a promotion launched in January that included so-called employee pricing plus rebates and zero percent financingOver the weekend, the company launched an advertising campaign that included full-page ads in newspapers across the country proclaiming it is "building a new car company."

The No. 3 U.S. automaker filed for Chapter 11 bankruptcy last week and is trying to complete a sale of most of its assets to Italian automaker Fiat Group SpA. It hopes to emerge from bankruptcy in 30 to 60 days and is working to allay consumer fears that its cars won't be backed by warranties. All of its factories have been idled.

Chrysler said the incentives, which begin on Wednesday, are aimed at reducing the bottom-line price of the car. They include $4,000 in cash, $1,000 for current Chrysler vehicle owners, and up to $1,000 for financing through participating credit unions.

With all the incentives, a 2009 Jeep Grand Cherokee would carry a sticker price of $25,230 instead of $31,320 _ a discount of 19 percent. A Chrysler 300C would run $31,885 instead of $37,885, a 16 percent reduction. Not all models qualify for the full $4,000 cash back, spokeswoman Kathy Graham said.

Chrysler's sales are down 46 percent for the first four months of the year. The automaker has been subsisting on $4 billion in government loans. It filed for bankruptcy protection on Thursday after a handful of its creditors refused to accept a government-brokered deal that would have reduced the automaker's secured debt.

Many in the industry have said consumers would be reluctant to buy a car from an automaker in bankruptcy protection because of anxiety that their warranties would not be honored if the company goes out of business.

Jeremy Anwyl, chief executive of the auto Web site Edmunds.com, said an incentive program that offers enough of a deal might help soothe consumers' concerns about Chrysler's future.

"Consumers are under distress too," he said. "If a car is a really great deal, people are going to put aside the risk."

On Tuesday, the judge overseeing Chrysler's bankruptcy proceedings ruled the automaker can start taking steps toward selling most of its assets to Fiat, including plants, equipment and the company's dealership network. Fiat would contribute smaller, more fuel-efficient cars to Chrysler's lineup, give it technology and open new European markets for Chrysler vehicles.

But even if the sale is approved by the bankruptcy judge, Fiat vehicles would not go on sale in the U.S. for another 18 months. Until then, the automaker will have to survive on revenue from its existing lineup, which remains heavily skewed toward trucks and sport utility vehicles.

Chrysler's incentive spending has risen markedly. In April, the company spent an average of $4,383 per vehicle on incentives, up 15 percent from April last year. By comparison, rival Ford Motor Co. spent $3,618 per vehicle. Japan's Honda Motor Co. spent $1,480.

Chrysler last week said its lending arm, Chrysler Financial, would no longer provide vehicle financing. General Motors Corp.'s lending arm, GMAC LLC, is taking over its business, along with third-party banks and credit unions.

Meanwhile, President Barack Obama said last week that Chrysler warranties would be backed by the U.S. government.

"Maybe some people have some worries about the longevity of the company," said Jim Press, Chrysler's vice chairman and president, in a conference call with reporters last week. "Well, heck, now the president of the United States, the U.S. government, is not only going to back our warranties, they're going to be an investor in forming our new company."

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AP Auto Writer Tom Krisher contributed from Detroit.

(This version CORRECTS ADDS example prices, background about Chrysler Financial, corrects day of bankruptcy judge's ruling.)