Chrysler Tightens the Screws on 173 Dealers
As previously reported, Chrysler's new task masters are getting tough in their efforts to cull the automaker's 3700 member U.S. dealer network. After excluding under-performing Chrysler stores from the company's dealer-only used car auctions, Sales Suit Steven Landry has sent 173 dealers formal notification that they have to increase sales in six months or else (i.e. lose their franchise). Hang on. That's not it. "We're not going after any dealers to get rid of them," Steven Landry told The Detroit Free Press. "The notes that we sent out say that you are under-performing by a very high degree compared to other dealers in your market, and we'd like them to improve their performance." The question is: how? Surely providing dealers with vehicles people want to buy is the best way to improve their performance. Surely putting so much pressure on the dealers that they cut corners, screw customers and sully Chrysler's name for decades to come is the worst possible solution. Oh wait. Private equity firms don't think long term. Right. Carry on.
More by Robert Farago
Comments
Join the conversation
Okay, so what I can't understand is this: If Chrysler actually is sticking it to these dealers, why in God's name would the dealers want to remain Chrysler franchisees? If they can sell a more popular car, why wouldn't these dealers welcome the opportunity to ditch the Chrysler millstone around their necks and start selling something that people actually want to buy? If Chrysler dumps its dealers in the smaller markets, they are effectively ceding that ground to their competitors, right? Because only a die-hard Mopar fan is going to drive 3 hours to the Chrysler store when there's a Ford, GM and Toyota shop in his backyard, and let's get real: There aren't enough die-hard Mopar fans out there to keep Chrysler afloat. Ultimately by screwing the smaller volume dealers Chrysler may solve some of their short term problems but it seems to me that the price paid in terms of bad faith with the customers (who purchased a Chrysler vehicle that they now can't get serviced locally) is going to be greater than any short term gain, right? I'm actually pretty neutral on the whole Chrysler-vs-dealers battle. They're all big boys who understand what's at stake and who know how the business works. If you can't stand the heat, etc etc. Like the mafia says when they "whack" someone, "it's nothing personal, just business."
I think that the number of Chrysler dealers here in Canada is very similar to the USA, If one picks up a Toronto newspaper called "The Sun" every other page has advertisements for Chrysler products every day, there seems to be a large glut of them, out here where I live in a very rural area, in my small local Town there is one dealer for each of the Big 2.5 and none for Asian vehicles, yet in the nearest large City there are lots of everything, it makes interesting times for all
If there are two dealers right next to each other, canibalizing each other's sales, then, yeah, kill the lower performing one. But if there's one in a rural area in the middle of nowhere than only sells a few cars a month, far from any other dealer of that make-keep it, especially if there is another car dealer (of any other brand) nearby, because if you kill it, you probably will lose 90%+ of those sales (unless sales are so poor that merely servicing the dealer (with signage, manufacturer's reps, whatever) costs you more money than the profits from the sales at the dealer brings in).