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Discussion Starter #1
Saw the following in the paper tonight:

Report: Chrysler, Dodge, Jeep may get own identities
November 16, 2007

ASSOCIATED PRESS

Chrysler LLC is considering wide-ranging branding changes that would streamline its product offerings and eliminate as many as 1,000 dealers, the Wall Street Journal reported today.

A plan currently under discussion calls for Chrysler dealers to sell all of the automaker’s passenger cars under the Chrysler name. Dodge dealers would sell only pickup and commercial trucks, and Jeep dealers would sell only Jeep and sport-utility vehicles, three dealers familiar with the discussions told the Journal for its online edition.

One of the dealers said the proposal was just one of several being considered, and that the company hoped to have a decision in place by the end of the year, the Journal reported. The dealers asked not to be identified because the plan has not been released publicly.

The plan would allow Chrysler, which seeks to return to profitability by 2009, to drop some of its overlapping products. That in turn would eliminate underperforming dealerships carrying excess inventory and using incentives that cut into profitability.
Messages were left after hours Friday with Chrysler spokesmen.

Chrysler Chairman and CEO Bob Nardelli said in September that he planned to keep the automaker’s three brands but could drop some products as he leads the company through a restructuring. He wouldn’t say which vehicles might go.

“I think we have to right-size the revenue, and that means we have to make intelligent decisions about the products and the brands,” Nardelli said. “We can’t just have emotional attachments about some of the products and brands that are out there.”

Private equity firm Cerberus Capital Management LP bought an 80.1 percent stake in Chrysler from its former corporate partner, Daimler AG, in August.
 

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So lemme get this straight, by this plan if I wanted to by a Dodge Charger, I'd go to the Chrysler dealership. If I wanted to buy a Dodge Durango or Chrysler Aspen, I'd go to the Jeep dealership.

This may be their plan, but it's the dumbest thing I've ever heard.

My dealer is a Chrysler/Dodge/Jeep dealer. They eliminate that from this one horse town and that leaves the Chevy and Ford dealers. I'm not driving to a different town for purchase or for service.... Sounds to me like the continuation of the Nardelli - Chrysler Suicide Mission.
 

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As the article said, its one of several ideas they're floating right now to return Chrysler to profitability. They do have several overlapping models (Aspen/Durango, Sebring/Avenger/Nitro/Compass) that aren't selling well for many reasons, mainly due to poor customer demand, bad introduction timing and bloated inventory. They do need to make some harsh and cutting decisions, just like Ford and GM did in the '80s and '90s. They've already started this process, but now they're talking deeper cuts, and those are starting to make the news.

Culling the dealer ranks would help them a lot. However, I would hope that in the process, they would send the remaining dealers through extensive customer service training at all levels (sales, service and management) and allow for the overhaul or rebuilding of older dealer facilities into a standardized model. That way they could achieve the level of service that today's customers demand. Had this been done during the DCX days it would have gone a long way toward improving the company's image and would have helped bolster sales, thus possibly preventing the drastic moves being proposed now and possibly making the "merger" work as intended.

I'd much rather see a smaller, leaner, more nimble company that offers products customers want than one that doesn't listen and keeps making unprofitable vehicles that dealers can't sell and people won't buy. I think the Chrysler is on the verge of doing this; we just have to wait and see what Nardelli and board decide. We also have to send them logical and rational ideas for what we want to see come out of the new Chrysler.
 

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I definitely agree with retraining the dealers but instead I think they've opted to reduce the number of dealers so it doesn't matter how you treat your customers, you're the only one around. As far as vehicle duplication goes, GM and Ford still do it. Pretty much any factory building multiple vehicles are sharing platforms. Look at the 300C, Charger, Magnum and soon to be Challenger, all based on the same platform. It just depends on the styling. There's no reason you can't have a Caliber, Compass and Patriot, if they are styled right they would all sell. Also, Jeep having a Compass, Patriot, Liberty, Grand Cherokee, Commander and Wrangler is the perfect way to cover the SUV/AWD market provided they're good looking quality vehicles. In the old days Jeep had quite a few different segments covered. Just because you don't like one of them doesn't mean they shouldn't build it. Chrysler has a long long way to go especially in vehicle placement and marketing.
 

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I do not understand how having dealerships affects Chryslers profitability. There is no Chrysler owned dealership, they're all individually owned and pay money to Chrysler, Chrysler does not pay the dealerships. It's a dumb plan.
 

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RedCommander said:
I do not understand how having dealerships affects Chryslers profitability. There is no Chrysler owned dealership, they're all individually owned and pay money to Chrysler, Chrysler does not pay the dealerships. It's a dumb plan.
The only benefit for Chrysler is reduced inventory and rebates to move the inventory. The benefit is for the dealers themselves, only the big survive.
 

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Discussion Starter #9
I think we are reading more into this than the article implied... I do not think they are intending to reduce any dealerships, I think they are just stating that their cars will be sold as Chrysler, Trucks as Dodge and Jeeps as Jeeps.

It soulds more like a renaming of products rather than an elimination of dealerships. IMHO
 

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a49erFootballFan said:
The plan would allow Chrysler, which seeks to return to profitability by 2009, to drop some of its overlapping products. That in turn would eliminate underperforming dealerships carrying excess inventory and using incentives that cut into profitability.
Messages were left after hours Friday with Chrysler spokesmen.

Sounds like it here.
 

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I guess it is in how you read it, I still see it saying that underperforming dealers would have less vehicles to sell, but it does not say anything about closing dealerships.

It sounds to me like there will simply be fewer vehicles that have the Chrysler, Dodge or Jeep name by reducing the number of different vehicles from the list currently available. But I could be wrong.
 

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I've saw it elsewhere, that's probably why I read it that way.

http://www.freep.com/apps/pbcs.dll/article?AID=/20071117/BUSINESS01/311170010/0/FEATURES02

Dealers may be next to face Chrysler cuts

November 17, 2007

BY TIM HIGGINS

FREE PRESS BUSINESS WRITER

With a cost-saving UAW contract and deeper workforce reductions planned, Chrysler LLC is moving on to another step in its strategy to streamline: working on reducing the number of dealers around the country and sharpening its brand image.

"We are openly talking with our dealers to get their buy-in and their opinion," Chrysler spokesman Jason Vines said Saturday, adding: "We're having discussions on a variety of areas with our dealer body."

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A report circulated Friday said one plan being discussed could eliminate as many as 1,000 of Chrysler's 3,700 dealerships as the company streamlines which vehicles are sold under its three brands. Chrysler disputed the report, which caught some dealers by surprise Saturday.

Vines stressed that no decisions had been made and no timeline set.

"Sure, all of the dealer body would like to get down smaller, but there is no way on God's green earth to get down to that number," Vines said.

Chrysler, like other Detroit automakers, has been working for years to reduce the number of independently owned dealerships that sell its Chrysler, Dodge and Jeep brand vehicles.
 

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Discussion Starter #13
I see where you come from based on that report, however it also said that Chrysler disputed that report. I guess time will tell. I know we have a dozen dealers here in the Phoenix Area.
 

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Discussion Starter #14
Here is another spin out of San Francisco

SAN FRANCISCO -- Chrysler is considering cutting up to 1,000 dealers and retooling its model line in an effort to return to profitability by 2009, the Wall Street Journal reported on its website late Friday. As a part of its effort, the automaker is considering dropping some of its overlapping products that compete with one another, such as the Dodge Avenger and Chrysler Sebring, which are both midsize sedans, reported the newspaper. Chrysler also will discontinue the entire PT Cruiser line after the 2009 model year, the newspaper said, citing a dealer who was told of the decision earlier this week.


Copyright © 2007 MarketWatch, Inc.
 

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RedCommander said:
I do not understand how having dealerships affects Chryslers profitability. ....
If you have one buyer that has access to two dealerships, that buyer can play the dealerships against each other and negotiate a lower price.
 

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Assuming that kickback comes from Chrysler, wouldn't that mean the mother company is money ahead since the dealers are competing for those sales, thus making those volume kickbacks less frequent? Maybe I'm just being ultra-dense, I just don't understand how fewer dealers equals more money for Chrysler. Don't the dealers pay franchise fees as well?
 

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RedCommander said:
I do not understand how having dealerships affects Chryslers profitability. There is no Chrysler owned dealership, they're all individually owned and pay money to Chrysler, Chrysler does not pay the dealerships. It's a dumb plan.
I would assume (you know what they say...) that they are planning to cut down on production also (the article mentioned "right-sizing"), so if there are fewer dealerships + fewer Jeeps, Chryslers, etc. available for sale + stable demand would = increased prices for the dealers. If the dealers are selling the vehicles for more, then the manufacterer can raise wholesale prices, reduce holdbacks, incentives, etc. All would lead to increased profitability.
 
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