Chrysler Marketing Chief Warns That All 3181 Dealers May Face Elimination
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Chrysler?s marketing chief is issuing a stark warning to those who insist it didn?t need to fire 789 of its dealers as part of its court-protected bankruptcy reorganization. ?The stark reality is all
3,181 dealers will face elimination,? Steven Landry, executive vice president of marketing, asserts in a new posting on the automaker?s blog, TheFirehouse.biz.
The troubled automaker, which filed for Chapter 11 bankruptcy protection, late last month, has taken some sharp criticism for its decision to eliminate nearly a quarter of its retail body, but in his blog, Landry insists the process of choosing which retailers to drop was ?thorough, rigorous? and fair, and was based on a ?data-driven metric? that looked at factors such as sales volumes, customer satisfaction, and whether the dealer handled all or just some of Chrysler?s three brands.
Really? It seems doubtful to me--especially since the idea that's been projected (and I'd assume it's an honest one) is that Chrysler LLC "wants" to become viable again and renew their business.
How they'd ever manage to pull that off without dealerships I don't know. I guess they could sell cars direct, but I think that would be a logistical nightmare and something that would also be received cooly by the general public.
Hah! The public has been icy about most of this deal. Why would they start listening now. After all - there's an agenda to be carried out, and it has nothing to about the economy recovering.
- Project "Alpha" started in 2001 to consolidate Chrysler, Dodge and Jeep brands under "one roof". I take it that at the time, that Plymouth had already been discontinued. And by "one roof", that Chrysler was forcing all dealerships to become (or carry) Chrysler, Dodge and Jeep brands.
- Term used to describe the optimum or desired dealership is one that "sells over 100% minumum sales responsibility". What the hell does that phrase mean?
- Project Alpha continued up til 2007, when it seems to have been renamed to project Genesis.
- Factors deciding which dealers would be cut included - Minumum sales responsibility and facility (again, WTF is that?) - dueled with another franchise - customer scorecard
Those were the basic factors. They changed based on the market, the State, or the environment in which the dealers coexisted with others (which is a very muddled explanation).
Basic facts about the 789 US Chrysler dealerships to be closed:
- 44% sell vehicles made by a competitor and will continue to do so after their chrysler franchise is terminated
- 83% sell more used cars than new cars, and they will continue to do so
- the 789 dealers to have their Chrysler franchise pulled represent 25% of the current dealership total, but account for 16 of sales volume. Which is, if you ask me, not a huge imbalance, and likely there are dealerships in this group that sell their full share, if not higher, of the total sales volume.
- 50% of the 789 dealers sold fewer than 100 new vehicles in 2008 (I assume they mean Chrysler vehicles). There seems to be no accounting for the horrible market conditions in 2008, or the historical performance of these 789 dealerships.
- 40,000 unsold vehicles at those 789 dealerships will be redistributed (meaning that they don't own them ???) This redistribution started May 20 and is projected to take 3 weeks. This is an average of 50 vehicles per dealership.
- Parts inventory will also be redistributed.
- Annual sales volume (presumably US sales volume) reached more than 16 million units "a few years ago" and aren't forecast to exceed more than 12 million in the next 2 years. This is presumably for all auto makers who sell vehicles in the US.
Absolutely no explanation given for how or why the dealership network or individual dealerahips constitute a monentary operating expense for Chrysler or affect the profitability of the company.
Absolutely no explanation given as to why natural market forces can't, or don't, operate on individual dealerships such that the dealership network is reduced by attrition.
Absolutely NO MENTION of how these dealership closing will result in a reduction of costs for Chrysler.
Absolutely no mention of the fact that this will lead to an EROSION or loss of sales and market share as these dealerships switch to selling competitor's products.
"MoPar Man" Wrote: "or why the dealership network or individual dealerahips constitute a monentary operating expense for Chrysler or affect the profitability of the company. Absolutely NO MENTION of how these dealership closing will result in a reduction of costs for Chrysler."
As mentioned before: Taken from an article on Slate "It saves them money. Car companies don't actually own dealerships-instead, they have contractual agreements that dictate factors like location, display space, signage, and service options. Nevertheless, Chrysler and GM and other auto manufacturers must maintain a large, costly field force of trainers (to train technicians to fix cars), salespeople (to persuade dealers to buy more cars), and auditors (to verify claims for reimbursement). The more dealerships, the more go-betweens a car company needs to employ and the more money it has to shell out."
Probably a term very specifically and legally defined in the franchise agreements.
It might be interesting to know what that is too - were too competitive in pricing ( readily engaged in "price duels")? - or badmouthed the dealer down the street?
That, or they will be bought or credited back to them at some final settlement when they are officially closed - there's bound to be some standard form that has already been drawn up to itemize a net settlement
- just like a house or any other closing. Chances of the net settlement figure on any given day up to the closing for a given dealer being $0.00 is probably astronomically small. Someone - either Chrysler or the dealer will be writing a check to some entity representing the other.
Maybe Obama will take them out on the street and hand them out to the poor - you've heard of "redistribution", right? (sorry - couldn't resist that little play on words)
Seriously - just like the cars - a 'settling up" will take place.
Natural market forces? Where have you been? Google "fascism". Seriously - why would you think of using the term "natural market forces" in this discussion?
Probably incremental savings as discussed before. And in a government-run operation, reason (and free-market pressures) take a back seat to all kinds of artificial pressures (IOW - it wouldn't matter if there are savings or not - to a politician all that matters is that something is being done that some logic having nothing to do with reality can be sold to the people pulling the strings, and possibly a different logic can be sold to the public (though I don't think the public is buying it - and if we do, the collective "we" deserve what we end up with).
See above. How is that any less logical than the fact this was all done for the unions, yet Chinese cars are going to be imported into the U.S. (in the GM deal anyway)? Your problem is that you're trying to make sense of a business being run by a government (and not just *any* government - a government that does not even pretend to believe in a free market economy).
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