Canadian Chrysler Dealer's Firmly Held Belief in Brand's Future
Scott Held draws a line in the sand. “I firmly believe we will be selling Chrysler for quite a long time.” Held is the president and managing partner of Sherwood Partners. In the same year that Chrysler’s U.S. sales have shrunk by 35.9 percent, his group has just spent CA$18m on a new, super-sized Chrysler dealership in Edmonton, Alberta. What if Held’s wrong and Chrysler goes belly up? “I know I am taking a risk,” Held admits. "But I have faith."
Held’s been in the business for fourteen years, including the last three managing or running dealerships. He’s lived through Chrysler’s chequered past– and sees good things in its future. He disputes the widely-held belief that Daimler-Benz pillaged Chrysler.
“Yeah, it was a take-over. I mean, all the Chrysler execs were fired and replaced with Benz guys. But under Benz, I saw some of the product development; it gave us access to some high-technology Mercedes components we would never have had access to,” he states matter-of-factly. “It was better for Chrysler than it was for Benz. Benz bought the company for $40b and sold it for $7b,” he reminds me.
And yet, the sharp decline in bankable market value didn’t set off warning signs that Chrysler may be in bad shape.
Several factors fuel Scott Held’s optimism, not the least of which is the 22 straight months of sales increases for Chrysler’s Canadian retail operations. The success is in stark contrast to Chrysler’s U.S. misfortunes. Held attributes the Chrysler’s Canadian success to “aggressive marketing and incentives”, and, surprisingly, product.
“The Patriot, Caliber and Compass are giving us access to young people we’d never have seen… The Caliber is doing much better than the Neon.”
It’s difficult to say if Held’s analysis is on the mark. Though smaller SUVs have always fared better in Canada (where gas prices are currently hovering near $5.20/gallon), Chrysler advertises heavily in the U.S. also, and all of the models Held named are also on sale there. And doing badly.
Chrysler was one of the earliest automakers to cut Canadian MSRP to achieve parity with U.S. prices. I asked Held if he thought the move created a sales bubble, foreshadowing an eventual decline.
“They addressed the [rising dollar] very early. It didn’t give us a boost. November and December  were tough months for all of Canada but we still kicked ass. If anything that just let us keep our customers we would have lost to the U.S.”
Held is fully confident in Canadian demand for Chrysler products; no bubble here, move along.
Held admits Chrysler has made a few mistakes over the years, most visibly on the Sebring. “That’s an easy one to pick on,” he jests. He was also worried about Chrysler dropping the short-wheel base Caravan for the new 2008 generation. “It did a lot of stuff for not a lot of money.”
But the bravado of the salesman always returns to the discourse. Those things “have been addressed” now. Old Sebring buyers are going for the Avenger, and SWB Caravan shoppers are going for the new Dodge Journey. “I’m surprised at how well that thing is doing,” he muses.
Despite the “good years” under Daimler, Held thinks Cerberus is a better fit for the troubled Detroit automaker. “I’ve met Bob Nardelli,” he mentions. “They’ve done a significant amount of restructuring. They’ve committed to spending large dollar amounts on product development and on hybrids.”
Daimler, he recalls, was much more obsessed with diesel-powered cars, as befitted its European heritage. Held thinks the hybrid Durango/Aspen twins will be some great sellers. He’s so confident, that he’s ordered a “bunch of them” for his dealership. “A more volume-selling [i.e., smaller] hybrid is on the way. I think that’s where Jim Press wants to go.”
When prodded about Chrysler’s lengthy development time, Held concedes that Chrysler is a bit late to the hybrid party, but it still has to be done. “Honda and Toyota have the most success with hybrids on cars that are already fuel-efficient. We’ll be a bit late to the party, but I don’t think the party will be over.”
Held isn’t sure when such a car will come, as he doesn’t hear from Chrysler’s new, mysterious overlords much earlier than the Internet does, but his optimism isn’t tainted.
To my relief, Held’s not fazed by any of the doom-and-gloom I bring to the conversation. “I think that ‘operational bankruptcy’ thing was played up by the press because it makes a good story. The brand isn’t going to disappear.” One thing’s for sure: time will tell.
Gnmtal on Jul 09, 2008
nice to hear from other edmontonians! i think we in alberta are stupid in that our economy is so good we're super-willing to pay uber-high prices for cars compared to americans. these dealers have no incentive to lower prices. if we all held back for a couple of months we'd probably see some serious movement in pricing. and seeing so many kids driving $50k sti's, people in all sorts of bmw's, and king ranches is evidence that we're not cheap! anyway, that's probably why we're seeing dealers able to spend multi-millions of dollars on new facilities.
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