Chrysler to Dealers: Merge or Die(t)
The National Automobile Dealers Association (NADA) shindig in The City by the Bay is all abuzz about domestic manufacturers' "dealer consolidation." As we've been saying for the last two eons, The Big 2.8's obese dealer network (GM still has over 6k franchisees) is a millstone around their collective neck, forcing them to spread their corporate resources paper thin. Now that The Big 2.8 are supposedly addressing the problem by "combining sales channels" and "helping dealers merge," it should be noted that the vast majority of the "credit" for lowered domestic dealership counts goes to… bankruptcy. The simple truth is that hundreds and hundreds of The Big 2.8's dealers are failing, closing and disappearing. Meanwhile, what "carrot" can the automakers offer for consolidation? Cash? Hot models? Er, no. Ah, but Chrysler's found a stick! Automotive News [AN, sub] reveals the hidden hand behind "project Genesis:" "Chrysler LLC plans to prune its product lineup to the point that only dealers carrying all three of its brands — Chrysler, Dodge and Jeep — will have a full vehicle line." Ex-Toyota Prez, current Chrysler Veep Jim Press outlined the threat. "If (dealer) consolidation doesn't occur before the product goes away, it will be more difficult for dealers to get what they want." Is that a threat? Is that legal? Inquiring minds want to know.
It is a threat. I am no lawyer, and I am not privy to the contracts. Still I would bet some jury somewhere will eventually find in favor of a dealer. I suspect Chrysler is making a bet on this after having spent a LOT on legal advice.