Dealers finally feel heard at Chrysler

[VenSeattle]

Dealers finally feel heard at Chrysler

By Sharon Silke Carty, USA TODAY
link to Original Article

Chrysler dealers are "more optimistic than we've been in the last 20 years," says John Schenden, who owns Pro Chrysler Jeep in Denver and serves as a spokesman for dealers.

Chrysler dealers have a new outlook about their business, an emotion many say they haven't faced in decades: optimism.
With new leadership in place — including Jim Press, a former top Toyota executive — struggling Chrysler is set to make a rapid recovery, dealers say.

They're even embracing the idea that Chrysler has to reduce its number of dealers and offer fewer models, moves that in the past would have been expected to stir up controversy.

"As a dealer body, we are more optimistic than we've been in the last 20 years," says John Schenden, owner of Pro Chrysler Jeep in Denver and a member of Chrysler's dealer council.

Chrysler recently became an American company again, after nine years partnering with German automaker Daimler. Private-equity firm Cerberus took over as majority owner in August and quickly changed the leadership structure.

Within weeks, Chrysler recruited two top executives from Toyota: Press, who had been president of Toyota North America and the highest-ranking American in the company, and Deborah Wahl Meyer, who headed advertising for Lexus, Toyota's luxury division.

Dealers say the new management is showing a willingness to listen to their concerns, and they believe the automaker will follow through on promises to make the company more customer-focused.

As Chrysler's problems have mounted, dealers have shouldered a significant amount of stress dealing with excess inventory and competition among themselves.

Regaining dealer confidence is a top priority for Chrysler, Press says.

It's no secret that Chrysler, which has the Chrysler, Dodge and Jeep brands, has to trim its dealer body. It has 3,700 dealers across the country competing against each other for sales and has been talking for years about reducing the number of dealers. Chrysler is the fourth-largest-selling carmaker in the USA. By comparison, Toyota, which is the second-largest U.S. seller and also has three brands, has 1,400 dealers in the USA.

Press says creating "a bond of respect and trust with our dealers" will help the automaker "do a lot of these tough things together."

"The dealers will play a huge role in driving this process," he says. "They are the customer. They will be in front of us in leading the way."

Under DaimlerChrysler, Chrysler was forcing dealers to take vehicles they couldn't sell. It also handed out big bonuses to dealers who met stiff quotas, and those who couldn't meet the quotas got nothing. That left dealers competing with each other for sales, undercutting each other on prices and hurting profit margins.

Viva Las Vegas

Earlier this month in Las Vegas, dealers met for the first time with Nardelli, Press and Meyer. Chrysler says about 75% of its dealers showed up, the highest attendance at a dealer meeting in 10 years.

Dealers left the meeting saying they felt as if, for the first time in years, they were being heard.

It didn't take much to impress the group, just one little change in the meeting format.

Rather than submitting questions to the executives on index cards, a process which left dealers wondering if their more controversial questions were left out, a couple of microphones were set up in the room, and dealers were invited to walk up and fire away.

"Usually those things appear to be somewhat staged," says Ken Zangara, a Chrysler dealer in Albuquerque. Dealers "asked questions for about two hours. It went on and on, and they answered every single question face to face."

"Everybody's heard the words before, but it's how they're said," Schenden says. "Bob Nardelli and Jim Press gave us the words, but they did it with such a passion and conviction and believability. That's something we haven't had in 20 years."

At issue: Inventory control

Inventory control was among dealers' top concerns, Zangara says. Last year, Chrysler found itself with thousands of unsold cars and trucks sitting on parking lots around the Detroit area. The excess cars were built without orders from dealers in an attempt to keep factories pumping out product.

Dealers were pressured by Chrysler sales managers into taking cars and trucks they didn't want. When a vehicle comes to a dealership, the dealer buys it from the automaker and begins paying a loan on it until it's sold. So dealers are motivated to keep their inventories as thin as possible.

"They assured us they're not going to do that anymore," Zangara says.

Press says Chrysler is slashing production to get inventory more closely aligned with demand. Next year, the automaker will cut about 100,000 vehicles from production.

Nearly 85,000 vehicles are being cut from the fourth-quarter production schedule.

The difference in being private

The decision to trim fourth-quarter production took about seven minutes, Press says, despite the fact that it meant cutting about $1 billion out of that quarter's cash flow.

"In our situation financially, and with all the things that are going on, that's a tough decision to make," Press says. In a publicly owned company, that kind of decision could take months. "And here this happened within minutes. It was the right thing to do, and it was done."

Press says the automaker is studying its model lineup and looking to eliminate models that are competing with one another.

"We have models that overlap, where we've got two or three vehicles that serve the same market segment or maybe the same customer, and we actually compete with each other," he says. "That's not very efficient."

Still, even with plans to cut back on certain models, Schenden says he's never felt better about Chrysler. He recently bought land next to his dealership, which he will use to expand the business.

"We've got the strongest team up top," Schenden says. "With that kind of confidence, I think we can do anything. People make all the difference."

[VenSeattle]

I imagine CMG, BrewSwillis, Dodgefan, etc would appreciate a more positive Chrysler LLC-based article... I actually read this in the USA Today while on vacation and thought of them! :AH-HA_wink: It has some good information on the decisions recently made.

One thing for sure, it gives hope to Chrysler LLC since the dealers are supporting the changes.

[CMG]

I imagine CMG, BrewSwillis, Dodgefan, etc would appreciate a more positive Chrysler LLC-based article... I actually read this in the USA Today while on vacation and thought of them! :AH-HA_wink: It has some good information on the decisions recently made.

You've stunned me!

[Flybrian]

Dodge and Chrysler don't belong together in an ideal world, but oh well.

[Intrepidation]

I imagine CMG, BrewSwillis, Dodgefan, etc would appreciate a more positive Chrysler LLC-based article... I actually read this in the USA Today while on vacation and thought of them! :AH-HA_wink: It has some good information on the decisions recently made.

Aww, I feel so loved!

It's nice to see optimism, and it seems like Chrysler is set to make a comeback..but I can't get too excited until I see the new product under the new ownership. That's where the proof lies.

I do agree with fly that in an ideal world Chrysler and Dodge would be separate...but one thing at a time I suppose.

The only sad part is that it won't bring back Tom Manzi Dodge...I loved that dealer and I still miss it.

[Dsuupr]

I, for one, will start considering Chrysler products now that they are "American" owned. Well, once they build something I would be willing to own.

[ehaase]

I would only consider the minivans or anything with a Hemi. The rest of the lineup, except for Jeeps, are duds.

[vonVeezelsnider]

That one's from Calgary, near the Airport. Their building is 11 years old, what you see in that picture isn't anything new.

Edited October 28, 2007 by vonVeezelsnider

[cire]

It's great to see that Cerberus is serious about turning Chrysler around. Actually listening to the guys who deal with the customers face to face is definitely a step in the right direction. It would be awesome to see Chrysler LLC properly position their brands and start producing world class, segment leading products.

[RJB]

Press says the automaker is studying its model lineup and looking to eliminate models that are competing with one another.

"We have models that overlap, where we've got two or three vehicles that serve the same market segment or maybe the same customer, and we actually compete with each other," he says. "That's not very efficient."

They have come out and said this publicly elsewhere recently, and this is one of the best things they have admitted to. This statement alone is the road to making them very competitive again. I'm glad they have said this because they have had to really really cut the bloated lineup by a ton for such a long time. Then they can focus on putting out a far better product, which they have needed for some time. I only like a few products that they put out and I think alot of people feel the same way, you can't sell cars/trucks if you only have a few that are getting attention by the media or the average consumer.

[Intrepidation]

I'm pretty sure two the models they are referring to are the Compass and Aspen. I think the third would be either the Nitro the Commander, or the Sebring. However the Nitro is designed to appeal differently than the Liberty since it has the bigger V6 and doesn't have the offroad gear. I think the current Sebring overlaps with the Avenger because it's not much better inside and it doesn't handle as well as the Avenger R/t and has the same powertrains. The Sebring should continue but with a new interior, better suspension tuning, a major restyle outside, and better powertrains.

Maybe, for example, the Sebring could have the 4.0/6-speed at it's top trim while the Avenger's top trim had the 2.4 Turbo/6-speed auto or manual. Both would make great power but would appeal differently.

[Polish_Kris]

I, for one, will start considering Chrysler products now that they are "American" owned. Well, once they build something I would be willing to own.

LOL, what if Magna won the bid, then it would be Canadian, would you consider it then?

[Chicagoland]

For sure, Plymouth isn't coming back as a brand. All the dealers will be C-J-D stores eventually. No room for nostolgia. Maybe a 'Chrysler Plymouth' vehicle, like a minvan, but no full line up. It hadn't been a full line make since 1977, anyway.