SAN FRANCISCO – Chrysler, Dodge and Jeep brand dealers were a sore bunch two years ago when the former DaimlerChrysler AG’s Chrysler unit continued to force unrequested inventory on them.
The new, privately owned Chrysler LLC is trying to correct the sins of the past and patch up the auto maker’s relations with its dealers.
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James Press, four months on the job as co-president of Chrysler, says his first goal is to restore dealer trust and profitability.
"We’re going to have a more effective dealer body and take the war out of the relationship," Press says at a J.D. Power and Associates conference, part of the National Automobile Dealers Assn.’s 91st annual convention here.
Press says Chrysler has eliminated the so-called "sales bank," a shadow inventory program of unsold vehicles that came to light after Ward’s detected discrepancies in the auto maker’s monthly sales, inventories and production totals.
"We’ve taken 100,000 cars out of dealer inventory," he says. "That’s $500,000 a day in floor-plan costs."
Chrysler also has ended a controversial dealer-incentive program that financially rewarded retailers for hitting volume sales targets. Critics claimed it favored some dealers over others, creating an uneven playing field.
Dealer relations bruised when inventories piled up due to controversial program.
Asked by dealer Michael Baker, CEO of the Baker Automotive Group in San Diego, how much Chrysler wants to reduce dealership ranks over the next five years, Press says, "There are no numbers. We’re going to sit down in each market and figure it out, looking at all the variables."
Chrysler is using a map with "circles showing where we should have dealer representation and dots showing where we do," Press says. Impending "right-sizing" of dealership numbers "is not being done for us, it’s being done for dealer profitability," he says.
Press also says the auto maker won’t reduce store numbers by buying dealers out en masse. "We are not in a position to get a checkbook out and start writing big checks. We could do that, but they’d bounce. The money isn’t there to do that."
Rather, consolidation will be done as "a collaborative effort with dealers" that Press calls "our customers." He praises dealers for their ability to handle change.
"Dealers can adapt so much faster than manufacturers," Press says. "They feel the moisture when it rains and the dry heat when it doesn’t."
Dealer relations bruised when inventories piled up due to controversial program.
NADA Convention & Exposition