At the moment, Chrysler reimburses a dealer for the cost of topping-up the gas tank on a car the dealer sells to a customer. No mas. That little tidbit was buried deep in the Detroit News story about Chrysler’s incipient “traveling roadshow”– a corporate effort to “convince” dealers to order more cars despite the fact that no one’s buying them and it costs money for the dealers to have vehicles sitting on their lots. We also learn that Chrysler has frozen the labor rate for warranty work, scheduled to rise in ’09. “‘I think they understand the place we are in and understand the need for all parties to put some skin in the game,’ said [former Toyota Prez and current Chrysler Co-Prez Jim] Press, who received a standing ovation during the meeting with about 400 dealers.” Somehow I don’t think it was that particular statement that earned Mr. Press the standing O. Perhaps it was his pledge to work for $1 until Chrysler paid back its four soon-to-be seven billion dollar loan. Just kidding. Unfortunately. Anyway, Chrysler’s set a target for channel stuffing– I mean, dealer orders…
“Chrysler needs 78,000 new U.S. car orders in February, about 12 percent fewer than in the same month a year ago, said Steven Landry, Chrysler’s executive vice president of marketing and sales. ‘We think that’s fair,’ he told reporters.”
So Chrysler is set to “encourage” dealers (I want you should order me a car) to order 12 percent fewer cars than last February, after December sales dropped 53 percent. Define “fair.”
Strangely enough, The DetN couldn’t find any dealers– on or off the record– who said “Hell no” to Chrysler’s request. They quote two who’re on board with Press full-court press. And it makes for some scary reading.
“Wesley Lutz, owner of Extreme Dodge/Hyundai in Jackson, went into Sunday’s session prepared not to order any new vehicles this month but changed his mind after listening to Press.
“Lutz now plans to place an order Tuesday even though he already has more than a 100-day supply of vehicles on his lot.
Press made a straightforward pitch to convince Lutz to order more vehicles.
“‘He said, ‘Do you want the Kool-Aid or do you want reality?’ Lutz said after the meeting. ‘He promised us we’d still be open for business in April. That’s pretty powerful.’
“Dealer Fred Frederick, a Chrysler, Dodge and Jeep dealer in Laurel, Md., said he also would order new vehicles despite having a 60-day supply.”
In case you didn’t already know it, this will not end well.
Chrysler’s best cheerleader is named Lutz? They really are running on empty.
Really no tankful? :) Here in Brazil cars never come with their tanks full. Usually they’re running on fumes and the salesman sometimes is competent enough to remind people to fill-up as soon as possible. So, you just bought your new car, happy as hell, the second you’re out of the dealer you’lll be paying the gas station $3,6 US dollars per gallon! Just an extra cost of ownership.
BTW, I hope this Mr Lutz is brighter than GM’s. Keep the brand alive long enough to get Fiat products. Then he’ll really start making money!
What goes around comes around? Dealers have abused the consumer, so now it’s their turn. I remember in the 85′ I bought a new Mitsu Starion ESI (junk) and the dealer gave me a car with an empty tank and a $5 voucher for gas. Nice.
There’s a Chrysler dealer near here advertising a going out of business sale, I assume that is part of the endgame.
Isn’t the pitch reversed. Dealers will order cars that customers want to buy. Shouldn’t chrysler be encouraging the customers to buy? It matters not what the dealers think of the product, it is what the buyers want to buy that counts. If you are a chrysler dealer, how demoralized are you to have spent the last year losing most potential deals to competitors both domestic and foreign? You know the reason is product (or lack thereof) and not your lack of selection in inventory. If you have obsolete and unwanted cars (which will not be redesigned) and the competitors are out with hot new stuff, you can’t change that, even with incentives. Most new car buyers are savy enough to know that the true cost of their purchase will include future resale value. Chrysler here cannot help their dealers at all. With nothing but tooling for obsolete or consumer rejected models, they can only guarentee more of the same at deeper discounted prices.
It doesn’t seem wise to screw over the dealers on a minor detail like fuel as the dealers will just pass on the screwing over to the end customer.
FromBrazil>
Interesting to know, thanks. Also, I have gone there at 1.8 $R/ $USD and 2.3 $R/USD.
The price in $R is almost always the same. Do you know if gasoline pricing there is government controlled or highly taxed?
Also: Why can’t I fill up my own car with gasoline there? Is there some special reason that there are 5+ guys working at gas stations ? Is this related to the high price?
For americans: In Brazil there is no such thing as a gasoline station that is self-serve.
@ RF
If they load dealers up with supply charged to GMAC or Chrysler Financial, don’t Chrysler get countable “sales” and cash from GMAC/ChryFin immediately?
Might be an attempt to make the “required” Feb 17 figures look better…….
If the president of the company I worked for came in and said “don’t worry, we’ll still be in business in April” I’d take that as cause for alarm.
I remember clearly in the mid-to-late 70’s purchasing cars with almost no gasoline in the tank. A 1974 Camaro that I discovered with a faulty gas gauge on filling.. A 1976 Sundbird that had a permanently “locked” gas cap discovered on filling. It made for a quick trip to the gas station immediately after delivery. I can’t remember when cars started coming delivered with the tank full. It was a small pleasure.
How much can this cost the manufacturer? Something like $30 to $40 per car (at $2 per gallon). If the manufacturer is passing empty cars on to the dealer, this cost is moved to the dealer.
I think it’s just poor salemanship/customer experience to deliver the car without a full tank of gas. Just one more reason why people just “love” dealers and dealing with them.
‘He promised us we’d still be open for business in April. That’s pretty powerful.’
My morning laugh. The whole bunch of them are delusional and talking gibberish.
Robstar :
January 26th, 2009 at 8:25 am
FromBrazil>
Interesting to know, thanks. Also, I have gone there at 1.8 $R/ $USD and 2.3 $R/USD.
The price in $R is almost always the same. Do you know if gasoline pricing there is government controlled or highly taxed?
Also: Why can’t I fill up my own car with gasoline there? Is there some special reason that there are 5+ guys working at gas stations ? Is this related to the high price?
For americans: In Brazil there is no such thing as a gasoline station that is self-serve.
Sounds like Jersey.
“We will all still be in business when April rolls around…”
wait for iiiit…
…APRIL FOOLS!
Man, I wonder how the security is at these meetings, there have to be some pretty desperate dealers out there, and desperate people do irrational and sometimes violent things…
Robstar:
Interesting to know, thanks. Also, I have gone there at 1.8 $R/ $USD and 2.3 $R/USD.
The price in $R is almost always the same. Do you know if gasoline pricing there is government controlled or highly taxed?
Check both boxes!
Theoretically its a free market, but the reality is that government-controlled Petrobras has above 90% of the refining capacity so they pretty much control the prices. The “advantage” of this is that we don’t have wild swings in prices. The “disadvantage” is that the customer has been largely screwed for the last 3 yrs. So the government, via Petrobras, has been selling gasoline at what amounts to 70 $USD a barrel for the last 3 yrs. Problem is that over 2/3 of that time the price has been under that level. So we didn’t suffer too much when the price went up to $USD 140 last year, but now we are paying 100% more than we should.
And that leads to the second problem. Taxation on gas is almost 100%. So Petrobras functions like a second IRS. It’s a lovely source of revenue from taxes. And since in this country only the “rich” have cars this extra taxation is viewd by the lefties as “social justice”. Problem is more and more people are buying cars. In cities like mine the proportion of cars to people is almost at First World levels. So as more “poor” people buy and run cars, I hope pressure will build up to reform this corrupt little scheme.
Also: Why can’t I fill up my own car with gasoline there? Is there some special reason that there are 5+ guys working at gas stations ? Is this related to the high price?
Sure. The gas stations have high margins and the labor costs are very low so they can keep these guys employed. Actually our last President, in one of his dumbest moments, signed a law that forbids self-service gas stations. Yes it it forbidden. Why? To “save jobs”.
About 10 years ago the notion of self-service gas stations began to take hold. The Union of Gasoline Station Attendants started putting on pressure and the government, in a difficult political moment since unemployment was on the rise, caved and signed this crap piece of legislation. It will now be many years and only when consumers start demanding lower prices and someone figures out that by firing these guys you have lower costs that this law will be overturned. But I don’t expect that to happen anytime soon.
As a side note topless service is forbidden in my city, too. A couple of years ago an owner had this bright idea. Lines went around the block to get your car filled up there. But the city quickly moved in and since we are such a “liberal” and “advanced” society forbade that not on “moral” grounds, but by saying the fumes and such from the gas could hurt the girls’ health. In this case they were probably right, but we lost a show! :)
For americans: In Brazil there is no such thing as a gasoline station that is self-serve.
I wonder what happens when the Chrysler/Dodge dealer calls up his banker and says, “I need to add another 30 days supply of cars to my floorplan. Will you help me out?”
The loan officer reads that Chrysler sales dropped 53 percent in December ….
So, these poor fellows can feel all pumped up. I’ve been to sales meetings before and the audience gets all pumped up. Usually after they step off the plane, and get back to their offices, and return to reality, the thrill of seeing the EVP of sales drop through the ceiling tiles like Tom Cruise in “Mission Impossible” … the videos of Rocky Balboa pumping his fists in the air, …. the “glow” of the meeting wears off..
Let’s check back in a couple of weeks and see if the storage lots in Brampton or elsewhere are emptying out. Methinks the bankers, who really don’t want to go into the car business, will balk at the dealers’ requests for more floorplan.
Kudos, FromBrazil. You were very succinct in explaining this wonderful example of Brazilianism.
FromBrazil, by gasoline, don’t you mean E85 (85% ehtanol, 15% Gas). I thought Brazil’s gas was almost 100% E85 with ethanol from sugar cane crops.
How this delusion works is that the greater the sales have fallen, the higher the pent-up demand is for your brand. You bank the non-sales.
Chrysler has a HUGE pent-up demand for it’s cars just waiting to buy. Steven Landry, Chrysler’s Executive Vice President of Marketing and Sales just convinced the dealers this is how it works.
Autobraz:
Kudos, FromBrazil. You were very succinct in explaining this wonderful example of Brazilianism.
Doideira não? Só no Brasil mesmo. (Translation: Crazy isn´t it? Only in Brazil is such a thing possible.
cos999
FromBrazil, by gasoline, don’t you mean E85 (85% ehtanol, 15% Gas). I thought Brazil’s gas was almost 100% E85 with ethanol from sugar cane crops.
About 85% of the cars produced in Brazil last year are the so-called “Flex Fuel” cars. By that it means that they are able to run on Brazilian gasoline and/or ethanol at any percentage in mixing. Just some cars, all Renaults, some Fiats, are able to run on “real” or “international” gasoline. All others can run just on Brazilian gasoline or ethanol (E100).
What we mean by Brazilian gasoline is that depending on sugar prices, ethanol prices, internal and internationally, the government, or rather Petrobras, mixes into the gasoline anything between 25% or 27% of ethanol into the “normal” gasoline. THe truth though is that since there’s a tolerance of plus or minus 2%, at any given time, when I put gasoline into my tank, what I’m really doing is pumping anything between what we might call E23 to E27. In other words Brazilian gasoline is gasoline with a percentage of anything between 23% and 27% ethanol.
Duplicate
‘He promised us we’d still be open for business in April. That’s pretty powerful.’
This franchise owner IS drinking the Kool-Aid. Either that or he is the “Baghdad Bob” of Chrysler.
Jim Press must feel like a friggin’ idiot for leaving Toyota to deal with this train wreck.
Chrysler has frozen the labor rate for warranty work, scheduled to rise in ‘09
Ouch.
If there’s anything that should convince you not to buy a Chrysler, this is it. Once you go down the road of nickel-and-diming dealer service departments, your quality ratings are as good as Volkswagen’ed.
A high-quality marque would be pressed to recover from gutting warranty compensation because there’s no more sure a way to piss off a customer than to deny a warranty claim on a new vehicle and saddle them either with a really big bill, or a really big repair paperweight. Owners will forgive problems if they’re taken care of quickly and painlessly—hell, you might even score brownie points, a la Saturn—but screw them out of a legit claim and not only will they never come back, they’ll make sure their friends don’t, either. If you’re lucky, they’ll rat you out to Consumer Reports; if you’re unlucky, they’ll drag you to court, and lawyers cost more than mechanics.
The only reason the European makes haven’t been savaged for this sort of thing is a combination of owner arrogance (who wants to admit their glitch-ridden C-Class was a bad idea? Not Mister Power Executive), high leasing-vs-buy rates and historical predecent (VW: Screwing dealers and customers since 1935). Toyota would suffer if they tried this; Chrysler will get killed.
This is a real pity, because with the downturn in the economy, Chrysler has a chance to sell solid, cheap, versatile cars and gain market share against makes that sell pricier metal. The Caravan alone could be reason enough for them to live: it’s cheaper than the Rondo, never mind the Sienna, and fits people and stuff better than the Traverse or Flex. It’s not sexy, and the material quality isn’t stellar, but it’s the practical choice, and it’s not a discretionary toy.
My pontiac dealer done me that thing. Delivered a brand new car with an almost empty tank. When i told him about it i said: Gm doesn’t pay back to dealer for the gas they put in the car…So GM! I wonder if these people can figure out that it is those little stupid ennoying things that give us a bad idea about them…scrapping a couples bucks here and there when you are giving them 20 000$ bucks for the product you could have got somewhere else…for 20$ of gas that they could have hide in the price of the car i kinda felt screwed by the big corp instead of being happy of the new car smell i was enjoying. I don’t know about you but these little things make me say to myself: see you GM next time ill be shopping a new car, sure you got a tank of gas of me but you might just lose a customer for the next 40 years…Just when they are trying to bring back people in the showroom : We have change! Now we have more decent car!(hide that cavalier would you?). Oh well!
In case you didn’t already know it, this will not end well.
Meh… Depends on your definition of ‘well’.
For me it means 4×4 Rams, nicely equipped, for $10K each after a Chapter 7/11 filing.
Wesley Lutz, owner of Extreme Dodge/Hyundai in Jackson
Whiskey Tango Foxtrot?
Maximum Bob’s brother?
‘He said, ‘Do you want the Kool-Aid or do you want reality?’ Lutz said after the meeting. ‘He promised us we’d still be open for business in April. That’s pretty powerful.’
Wait. Was that the Kool-aid or the reality?
@ FromBrazil
In South Africa we also have government-controlled prices, but it works well because it is based on a formula that everyone understands. A new price is set every month based on the price of oil, the exchange rate, the expected consumption, and any over- or under-recovery from the previous month. Added to this are profit margins for the oil companies and garage owners, and a moderate tax. The price ends up being a little more than US prices.
And self-service is banned to preserve jobs. I think this is a good thing.
In South Africa we also have government-controlled prices, but it works well because it is based on a formula that everyone understands.
Oooh, a command economy aspect that works. There are people on this board who would probably place such a thing on the same level as Elvis serving burgers in Des Moines.
Calling scartooth…scartooth, come in scartooth.
“For americans: In Brazil there is no such thing as a gasoline station that is self-serve.”
For Oregonians, there isn’t either. I’m not sure what the justification is for it, but the end result is that convenience store clerking in the Beaver State is a partly-outside, partly-inside job. I can’t really say I see an impact on price, but then I haven’t been through Oregon since gas was over $3.
ihatetrees: “For me it means 4×4 Rams, nicely equipped, for $10K each after a Chapter 7/11 filing.”A Catch-22 situation since the trade-off for fire-sale prices will be trying to get it repaired under warranty (a foregone inevitability with a Chrysler product) and/or finding parts.
That’s the problem with bankruptcy: most people won’t want to buy an orphaned new vehicle, even one at a bargain-basement price, with a big question mark when it comes time to get the damn thing fixed.
@Robstar: For americans: In Brazil there is no such thing as a gasoline station that is self-serve.
Unless Californians and Oregonians aren’t Americans…there’s no such thing as self-serve in Oregon. Anyone who’s ever compared prices between the relatively (for the west) nearby cities of Yreka CA and Ashland OR will know that Ashland is often significantly cheaper.
I can see that self-serve might help oil companies justify higher wholesale prices, but I fail to see how it helps consumers.
In case you didn’t already know it, this will not end well.
The rest of us would say that predicting the future with absolute certainty is impossible.