Chrysler President Urges Dealers to Consolidate

Wall Street Journal ^ | 2/8/08 | JOHN D. STOLL

[BurbankKarl]

Chrysler LLC Vice Chairman and President Jim Press said Friday that the auto maker needs its dealers to start consolidating on their own without expecting big buyout checks from the company as an incentive.

Mr. Press, speaking to an automotive conference taking place before an annual car-dealer convention here, said that in coming years, the company will shrink its product portfolio to improve profitability. The smaller portfolio will best benefit dealers who combine the auto maker's three brands -- Chrysler, Dodge and Jeep -- into one location, he said.

For dealers waiting on big buyout incentives, they may want to change their strategy. Joking, Mr. Press said Chrysler could offer big buyout bonuses, "but about three days later you'd be unhappy when the check bounced." The executive said the company will support dealers to consolidate three brands into one location in various ways, such as evaluating real estate, but he said dealers that don't make moves to consolidate will not be able to maximize profits when the company's next round of new products starts hitting dealerships.

Mr. Press declined to give an exact number of vehicles the company will need to take out of its lineup. "There is no number," Mr. Press said, referring to the lack of an absolute target. He also said there is no defined target for dealer reduction. "We want our dealers to be the most profitable…[and] the product portfolio will be what we need to cover the market." He said the company needs to be prepared to sell only two million to 2.5 million annually, rather than sized to sell four million.

[Spktyr]

Smart move - they have entirely too many dealers in most urban areas. For example, do we really need 10 Dodge dealers in Dallas alone?

And yes, they need to go through and axe and/or redesign a lot of their cars.

Axe:
Dodge Nitro/Jeep Compass (A FWD Jeep. Who thought this was a *good* idea???)
Chrysler Sebring/Dodge Avenger (horrifically ugly, awful cars. Would not have been competitive in the 1990s.)
Chrysler Aspen (Again, what idiot thought this was a good idea??)
Jeep Patriot (Not that bad a vehicle, but pointless in the Jeep lineup when there’s the Wrangler.)

Redesign:

Dodge Caliber - redesign as a new Neon.
New Minivans - ugly as heck, need a redesign.

[AntiKev]

Just a couple of nits, Dodge Nitro/Jeep Compass are not the same platform.

I LOVE the look of the Avenger. The Aspen got the axe with the Durango when Newark Assembly went down.

The Caliber IS the new Neon. And the Minivans are pretty ugly.

[popdonnelly]

I read a neat criticism of this idea in Fortune magazine. If you take a Chrysler dealership that sells 1,000 cars a year, a Dodge dealership that sells a 1,000 cars a year, and a Jeep dealership that sells 500 cars a year and combine them, what do you get? You don’t necessarily get a dealership that’s going to sell 2,500 cars a year.

[nascarnation]

Some of Chrysler’s design talent went to GM with Lutz and some retired. They went from the best to quite mediocre in the styling dept.
FWIW I believe the Dodge Nitro and Jeep Liberty are on the same platform, although the Nitro offers an uprated engine option that the Jeep does not.

[AntiKev]

You are correct about the Nitro and the new Liberty. Don’t know about engine options. They are built in Toledo.

[Mr. Lucky]

This gentleman should be aware that lots of folks ain’t gonna drive into the city to buy a pick-up truck. I buy a truck every so many years from the local (small) dealership; but, if it closed, I wouldn’t follow the brand to some yuppie dealership.