“The [US] automotive industry cannot support the number of dealers currently in the marketplace. From 1990 until 2007, the industry averaged roughly 16m new vehicles sold each year. In 2009, new vehicles sold are expected to be 10.5m units,” Chrysler sales and marketing chief Steven Landry said, as the company provided more detail of its thoughts over the ‘rejection’ of some 789 dealers.
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“Chrysler is treating the rejected dealers fairly by assisting in the redistribution of remaining vehicle and parts inventory, paying incentive and warranty payments due,” Landry said.
“It was not an easy decision to ask the court to reject a portion of our dealer contracts, but the reality is Chrysler’s viability depends on a vibrant, profitable dealer network. As presently configured, Chrysler’s dealer network does not meet that test. If the sale to Fiat is not approved by the bankruptcy court, the stark reality is all 3,181 dealers will face elimination.”
He said the process to evaluate dealers was a “thorough, rigorous process that used a data-driven metric”. Factors included minimum sales responsibility; a scorecard that measured sales, share, shipments, customer satisfaction index, service satisfaction index and warranty repair; the dealer’s facility (capacity, Millennium II standards); location (optimum retail area); dualing (dealer is dualed with a competing manufacturer) and the market’s total sales potential.
“Under this plan, 2,392 dealers across the United States move forward with the new company. It doesn’t mean that the 789 rejected dealers will close if this motion is approved by the court,” Landry said.
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By GlobalDataHe said 44% of the 789 ‘rejected’ dealers were dualed with another (competing) new vehicle franchise and can continue to sell those makes of vehicles while 83% of the 789 ‘rejected’ dealers sell more used than new vehicles, so many of those will continue selling and servicing ‘pre-owned’ vehicles
“Chrysler began the process to consolidate dealerships and locate all three brands under one roof more than 10 years ago. The company made the decision it was cost prohibitive to continue to manufacture and market overlapping products. Going forward, we will not do that, so it is critical the majority of our dealers offer customers all three brands under one roof,” Landry added.
