Automotive News [sub] reports that Chrysler’s national dealer council has filed a motion in U.S. Bankruptcy Court to “save” the 789 ChryCo dealerships slated for termination. The council’s asking federal judge Arthur “Fast Track” Gonzalez to stay Chrysler’s dealercide in the name of Joe Q. Public. “Fewer dealers will mean less inventory available to the public,” the document maintains, placing Chrysler products on the same level as, say, foodstuffs. “Lower inventory reduces the chances that a customer will find the car they are looking for and therefore hurts sales.” A federal ruling to protect consumer choice in an industry with 40 percent plus overcapacity and enough excess inventory to choke an entire industrialized country? That’s just silly. Arty is scheduled to hear objections to Chrysler’s request on June 4, five days before the axe falls for good (or, in this case, “bad”). Never mind. Here’s where the REAL battle lines are forming . . .
Chrysler will not buy back the inventory and parts of the rejected dealerships. Instead the automaker will recommend dealerships that might be willing to buy the inventory. Chrysler wants to move the 44,000 vehicles at the targeted dealerships to surviving stores rather than see them go to auctions and used-car lots.
Huh? “Recommend?” Who sets the price for the unloved, unwanted and aging vehicles? Does “bad” Chrysler sell “good” Chrysler dealers at some hellacious discount, and then prevent them from passing on the savings to consumers? Seriously, how is this going to work, and why do I feel like Uncle Sam is going to end up bankrolling the boondoggle?
CBS has Chrysler’s official answer: the bankrupt automaker’s pre-C11 production shut-down has created / will create a product shortage. In other words, the surviving Chrysler dealers will want to mop-up the closed dealers’ inventory. Or, thinking about it another way, Chrysler won’t build squat for their remaining dealers until and unless they take on those excess units.
Sales in May have been stronger than anticipated, so dealers will need to replenish inventories, [company spokeswoman Kathy Graham] said.
“They’re not building anything right now, so they’re kind of creating a little bit of a product shortage,” Hollern said. “So, surprisingly, a lot of the dealers who have gotten new contracts to go on with the new Chrysler will be looking for new inventory.”
Then again . . .
Dale Horn, owner of a Chrysler-Dodge-Jeep dealership in Malvern, Ark., whose franchise was cut, isn’t counting on any help from the company to unload his inventory of 34 vehicles.
“Right now, I don’t have much confidence that they will do what they say. Nobody’s called me yet saying they’re going to try to help me,” [Dale Horn, owner of a Chrysler-Dodge-Jeep dealership in Malvern, Ark.] said.
Still, he’s determined to sell the cars and trucks before June 9, and he’s not ruling out selling at a loss.
“It’s not a matter of ‘if.’ We will sell them all,” Horn said.
These closing stealership will cut the prices greatly therefore it can adversely affect the staying dealers too.
U think the staying dealers will have enuf money to pay them good $ to take over the lock, stock & barrel?
It aint going to look pretty at all.
Did anybody really think that closing 789 dealers
was going to be a simple task?So they discount the crap out of the inventory.
How’s that going to impact the dealers that don’t have to close thier doors?Dealer A, thats closing will sell me a heavily dicounted Wrangler.
1O miles down the road surviving dealer B can’t match the price.
This could get ugly.
Sad for the dealers, but it’s Chrysler’s discretion.
Unless people want the government to overrule a private business decision. But as we all know that’s facism/socialism/communism/dendrophilia.
Now that the government owns Chrysler Leyland look for them to follow their famous techniques developed for running the post office.
Fortunately they have unlimited amounts of money until the Chinese refuse to lend them anymore money.
Tate’s Auto Group in Holbrook, AZ is selling their last four 2008 PT Cruisers (BRAND NEW) for $7,658 and their last 20 remaining 2008 Dodge Ram 1500 ST 4×2 models for $10,900. I’m sure the discounts are only going to get better.
If I wasn’t in the middle of a divorce I’d go try to make a deal on the PT Cruiser. It would make a great commuter car for when I can’t ride my scooter and don’t want to take my low mpg F150.
”Fewer dealers will mean less inventory available to the public”
Yes, that was the whole point of this. Chrysler will only sell 1/3, at best, of the vehicles they sold a few years ago. They need to adjust to that.
People seem to miss the point of who owns these vehicles… Not Chrysler, not the dealer…
They are likely owned by Chrysler financial. This is going to get a bit crazy..
If a dead dealer bought a PT Cruiser for $12,000, then moves it for $8,000, maybe they can only pay Chrysler financial half of what they owe when the dealer goes bankrupt/liquidates.
Maybe that’s how the dealers give a final FO&D to “the man”….
Anyone know the mechanics of this? Am I close?
Every dealer, without fail, try and claim their irreplaceable importance to consumers and the community. of course its all nonesense and of course they are gong to try and muster up a last stand.
“do you know what this is? this is the worlds smallest violin..” playing just for the dealerships
Whoever is doing the floor plan for these dealers has an equity stake in the inventory. You can’t sell something you owe money on, for less than you owe, without making up the diff to your creditor out of pocket.
The Feds don’t want to see thousands of cars being sold for 1/2 or 1/3 sticker, especially since GM is going to file on the May 31. GM and Chrysler dumping huge amounts of product for peanuts will break Ford’s back. A bankrupt Ford dumping product will kill Honda. A dead Honda will infect Toyota. This will lead to a monstrous deflationary spiral that will sweep its way across the globe. The Fed fears this scenario more than all the WMD’s in Bin Laden’s wet dreams. If the Feds really believe prices on Mopar and GM products are headed for a crash, you can expect another round of stimulus checks to the rescue. GM and Chrysler products will be infesting the the parking lots of every federal, state, county and municipal agency from coast to coast. If that isn’t enough, expect the feds to buy up unwanted product and send it to the crusher.
The dealerships which are closing are going to want to lose as little as possible on their inventory. Ideally if they have any in demand inventory (SRT models and Vipers) that will be sold off to another dealer at invoice with the originating dealer keeping the holdback. The next step is to offer up as much as they can to any dealer who wants it at invoice minus holdback (more or less breaking even, minus any finance charges the dealer has already paid on the inventory). After that it is a game of watching the auctions, the traffic on the lot, and what other dealers are willing to pay to see where the sweet spot for pricing is.
Unless a dealer is desperate to get out of the Chrysler/Dodge/Jeep game, don’t expect to see fire sales from day one. Of course operating costs for the stores will be taken into account, wages for hourly employees, lease/mortgage payments if the land isn’t owned outright, utility and advertising bills, etc (dealerships are very expensive to run), and some dealers may just want to save the time and future costs and get out early. However, overall I’m expecting to see gradually increasing discounts as the inventory gets picked over bit by bit, with the true huge savings being on the vehicles that no one really wants to touch (leftover 2007 models, stripper models with stick shifts, crank windowd, or no A/C, cars the dealership stuck aftermarket wheels/tires/bodykits onto, etc).
Think of how this will depress auto prices across the board. Anyone wanting a new car can steal one. Anyone not needing one can wait thinking prices will go even lower. The bums that can’t afford a new bike let alone a car will waste all the salespersons time.
I would be tempted to buy a new car at a big discount right now. I have good credit, and could easily get a loan. Except for one thing- the factory where I worked closed in November and moved to China- just about the time that every other factory here started laying off hundreds of workers each. The economy must be fixed before people start to buy cars (or houses) again. When the money stops GOING around, it stops COMING around too. And the fedgov knows nothing about getting the money flow started again- just watch and see. :-(
This, ladies and gentlemen, is how free enterprise works. Merely a long needed market adjustment. In a couple of years it will be business as usual. You walk into a new car store, you come out feeling raped.
I have to wonder how many of these dealers are going to hold anvil sized grudges and once they get themselves on their feet again, with brand new shiny Toyota, Honda, Hyundai, Subaru, Nissan, Kia, Chery, Brilliance, Geely, Mahindra, Mitsubishi, Suzuki or Mazda franchises, how they’ll be willing to push like HELL to ensure they outsell their former corporate lordsorverus’s remaining dealers in the general vicinity…
Paybacks are a Biatch….
And yes, I expect the Chinese to be in the USA within 48 months, tops. The Indians, in less than 24 months.
NulloModo :
The dealerships which are closing are going to want to lose as little as possible on their inventory.
Sounds great for the merch that is moving. Let’s get to the point though. What are they going to do with the Sebrings?
And if the floor plan lenders repo them, they have to dump them into the auction market. It’s still going to depress prices of the slow moving models
“Lower inventory reduces the chances that a customer will find the car they are looking for and therefore hurts sales.”
Well I think the ongoing issue here is that a Chrysler product is not a car a customer is looking for.
This, ladies and gentlemen, is how free enterprise works. Merely a long needed market adjustment. In a couple of years it will be business as usual. You walk into a new car store…
Wait. You lost me there.
Lucky for me I was looking to be in the market for a new car soon. My head is swimming with all the choices I could have in the next 3 or so months. Fire-sale Chrysler (ok, maybe not so much)? Orphaned G8? Slightly used G8 GXP (better for someone else to take the depreciation and pay the gas-guzzler tax)? Maybe even a Ford at a price depressed by theh Chrysler and GM bankruptcies?
Now if only they had any cars worth buying…
f8: “Now if only they had any cars worth buying…”They’re all worth buying, just not at prices anywhere close to their much better competition.
I mean, if they were selling Sebrings for 1/3 of MSRP, someone will buy them. They’re craptacular, to be sure, but if they were priced lower than a stripped Aveo, well, even a dirt-cheap craptacular new Sebring would be okay.
Speaking of the Aveo, anyone want to guess how low the price of those things will drop? Sheesh, if Chrysler products start bottoming out, it wouldn’t be surprising to see new Aveos going for less than $5k at shuttered GM dealers.
Anyone have a view as to the quality of the 2009 Jeep Patriot with 5 speed manual and the I4 2.4L? I hear it can get almost 30mpg on the highway and is improved over 2008 as far as interior and ride.
Bob Rohrman Jeep is one of the one’s on the chopping block. I say good riddance and hopefully the rest of Rohrman dealerships follow.
These people service my sister-in-law’s Jeep and dropped a garage door on the roof. Naturally, they tried to weasel out of providing a rental car due to the damage they caused. I’ve visited other Rohrman dealerships and have always come away feeling dirty and creeped out by their salesman.
This may sound dumb, but Chrysler Financial is going away, right? The government wants GMAC, excuse me, ALLY Bank to finance new vehicle sales. Why would dealers give a shit about what they sell cars for? Just sell products for whatever they can get for cash, and go bankrupt next month when they plug gets pulled. Screw Chrysler finance who floorplanned them.
Again, it’s far more financially suitable for a start up to tackle small productions of EVs than it is for established automakers. It’s like the dot com boom. People are willing to invest in early positioning in the hopes of an IPO that may or may not play out in the real world. That’s why the Internet bust followed the boom.
let me ask a few questions (that might seem naive)
surely a forced culling would result in massive unemployment?
what about the company principals with millions invested into the enterprise?
what about all the sales and support staff without a job?
I hate car salesmen as much as anyone and I certainly have fair bit of schadenfreude in my heart but ~2,000 dealers gone means shiteload of people without jobs…
Amazing how a small group of criminals aka corporate leaders are decimating the American economic landscape. Join me and vote no to these people by postponing automobile purchases for as long as possible. Stop being a victim and help send a powerfull message to the decision makers.
I remain unconvinced that the bloodletting of massive numbers of GM and Chrysler dealerships is in any way going to improve the sales revenue or profitability of GM and Chrysler.
Letting the marginal dealers fail in due course might have made sense, but what is going on is both wrong and counterproductive.
In our area, for example, Chrysler will now have no dealers in San Francisco or San Mateo counties. http://www.sfexaminer.com/local/Bay-Area-Chrysler-dealers-hit-the-road-45060362.html That means something like 2-4 million people without a local Chrysler, Jeep or Dodge dealership. The really crazy thing is that this reqion is right at the heart of the target market for small Fiat based vehicles.
Time to pick up either a new Charger or 300 for $12,000.
I’m not unreasonable, all I need is leather and the 3.5 liter.
If they’re selling new PT Cruisers for $7,500 and new Rams for $10,000, it’s all in line.
One of the car dealers near me is Jupiter Dodge-Mazda. I hear that they’re targeted for closure… or more like they’re going to become just Jupiter Mazda soon…
Would terminated by Chrysler dealers be in a relatively good position to try to get a Hyundai, Kia, or Mitsubishi franchise? Might be a little repair business overlap due to the Global Engine Manufacturing Alliance and past platform sharing.
http://en.wikipedia.org/wiki/Global_Engine_Manufacturing_Alliance
http://en.wikipedia.org/wiki/Mitsubishi_GS_platform
Not having a Chrysler franchise means no pesky contract blocking the dealer from moving a new brand into the building.
Why all the drama of axing some dealers, giving Chrysler to Fiat, and throwing federal government money at the mess vs. liquidation with taxpayer bailout of Chrysler pensions?
@Slumba:
What’s your definition of quality? Consumer Reports says very good reliability, bad build quality.
I wanted badly to like the Jeep Patriot. Then I got inside one at the dealership. The salesperson knew nothing about the Patriot, told me there was no Trail Rated version of it, and said it was “only an image product.” I got inside, poor materials, tiny windows, bad ergonomics, my knees hit the steering column.
I really wanted to like the Jeep Patriot. But no.
The new Ford Ranger can’t arrive soon enough.
For the Multi Franchise Dealership, what is preventing them for selling/titling them for $1 to the used section of the dealership, and making Chrysler Financial take the loss?
Is it possible to feel sorry for a dealer? No, empathy has it’s limits. Still, I almost feel sorry for Story Chrysler in Lansing, MI.
Story sold Oldsmobiles since the early ’50s. When GM killed Olds, Story had to sell something else – Chryslers. Now they have to go through all that a 2nd time.
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There really are no deals to be had – no matter what price you get them down to, you’re still driving home in a Chrysler.
I recall reading stories of Jim Press telling dealers that they had to order more cars or Chrysler would not survive and that the Chrysler execs would remember which dealers didn’t step up and order cars. Guess that didn’t work.
I still don’t see there being a massive firesale, with the exception of a few models that (relatively speaking) sold worse than other Chrysler models, such as the Ram and PT. I’d absolutely love a base Wrangler to come in somewhere south of $15k, but just don’t see it happening. That would perhaps get me in to the dealership to consider a purchase, as I’ve been wanting a Wrangler for years now. manual tranny, soft top, steel wheels, stripper version.
slumba:
“Anyone have a view as to the quality of the 2009 Jeep Patriot with 5 speed manual and the I4 2.4L? I hear it can get almost 30mpg on the highway and is improved over 2008 as far as interior and ride.”
Try this: 2009 Jeep Patriot Test Drive
http://www.allpar.com/reviews/2009/jeep-patriot.html
It’s a fair review that lists the good, the bad, and the new changes (new interior, retuned suspension, retuned CVT, Freedom Drive off-road packages (not trail rated but still better than a RAV4, or even a 4Runner in some cases)).
If I’m one of the surviving dealers and I can’t match the price of a dead dealer walking, I can sure welcome their customers with open arms for services and (possibly) future sales. I would advertise extending any future customer loyalty discounts to DDW customers. I would also offer to buy stock and equipment from DDW if they agree to give me their customer list.
Jimal, I think they’ll be wanting to keep their customer list so they can sell them some other brand….
If they’re halfway smart. And can afford to take another dip in the cesspool of new car sales.
ferrarimanf355 :
May 17th, 2009 at 11:05 pm
One of the car dealers near me is Jupiter Dodge-Mazda. I hear that they’re targeted for closure… or more like they’re going to become just Jupiter Mazda soon…
They’ve indicated they will continue as at least a Mazda only dealership. Shouldn’t that brand move out their doors in more volume than Dodge products at this point anyway?
Wow, I just checked, and dealers really are selling Rams at 55% off MSRP and PT Cruisers at more than 65% off of MSRP.
I now have to balance the embarrassment of driving around in a PT Cruiser (lets face it, the exterior design has not aged well), with the cut rate price of about $7,500 for an automatic with air, pw/pl, cruise and remote entry.
They’re blowing out Nitros, Calibers, Avengers, Chargers and 300s at about 35% off MSRP.
Guess we can all look forward to another round of seeing leftover bargain-basement ChryCo products being “torpedoed in the air” in film and on TV.
I visited one of these lame-duck dealers this weekend, in Tacoma, WA. They didn’t want to sell. Their advertised price for a 2009 Jeep Patriot base (crank-handles windows, etc.) was 18,006. And they were NOT budging! The salesman said the price was not negotiable. WTF?! 15 minutes later I was down the street at the Suzuki dealership, sitting in a much nicer and better-equipped Grand Vitara that had a lower sticker price and available incentives. Gee, I may not buy a Patriot after all… I’m beginning to see why Chryco inventory is piling up: the dealers don’t have a clue what their products are truly worth.