As General Motors (NYSE:GM) and Ford (NYSE:F) took their licks throughout 2005, DaimlerChrysler (NYSE:DCX) (still considered the third member of the "Big 3," owing to its U.S.-based Chrysler operations) actually had good news to report. Sales at the German-American automaker's Chrysler unit have been decelerating, though, raising the question of whether the company will join its rivals in the doldrums. Fortunately, DaimlerChrysler is working actively to keep the momentum going -- although some steps are more worthwhile than others.
DaimlerChrysler's May sales declined 8% year over year on an unadjusted basis. While the Mercedes-Benz group recovered from a slump last year, Chrysler notched an 11% decrease. As is the case at Ford and GM, declining SUV sales played a role as consumers shifted to more fuel-efficient vehicles. The drop-off for the Jeep Grand Cherokee was particularly dramatic, as sales declined 41%.
Part of DaimlerChrysler's answer to the problem is to introduce a diesel model for the Grand Cherokee. It's certainly an innovative step, since the new offering will be the first full-sized SUV with the company's diesel technology, which is expected to boost fuel economy by 30%. Still, the move hardly seems worth the effort. Because of emission requirements, the diesel Grand Cherokee won't be available for sale in several areas, including Massachusetts, Vermont, Maine, and two of the nation's largest markets, New York and California.
Thankfully, DaimlerChrysler also has other aces up its sleeves. The company's recently introduced Dodge Caliber, a four-cylinder mini-crossover, is already selling well. And later this year, the firm will launch the four-cylinder Jeep Compass, which is promised to have "exceptional fuel economy not expected in an SUV."
DaimlerChrysler looks to be in a somewhat better position than its rivals (which include BMW, Toyota (NYSE:TM), and Honda (NYSE:HMC)), when it comes to the fuel crunch. Sales of the 300 sedan are flattening out, but are still solid, while the Charger sedan continues to gain some momentum. Meanwhile, the introduction of new vehicles should help cater to consumers' changing preferences. 2006 probably won't be a breakout year, but the company still looks comparably healthy.
Bayerische Motorenwerke, better known as BMW, is a recommendation of Motley Fool Stock Advisor , where Tom and David Gardner are always on the lookout for the market's best investments. Try it out for yourself -- it's free for 30 days .
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
