I believe that, legally, I’m still their U.S. distributor. And I want trucks delivered to our dealers
Importing niche vehicles from an unknown foreign automaker has long been a fraught process for US-based entrepreneurs, and John Perez’s attempt to bring diesel-powered Mahindra pickups to the US has been no exception. For four years, Perez’s Global Vehicles distribution network waited while Mahindra sought EPA certification for its diesel pickup engine, and then six days after approval arrived, the Indian firm dumped Perez with little ceremony. Now Mahindra says it will consider giving franchisees to the dealers who paid Perez up to $200k for the right to sell Mahindras, but that it is not obliged to do so. Perez is suing Mahindra for failing to fill an order for pickups, while dealers are considering suing Perez and Mahindra is seeking to end its agreement with Perez so it can distribute pickups through independent dealers. Mahindra’s Roma Balwani tells Automotive News [sub]
The current dealers’ contract is with GV [Perez’s distribution channel, Global Vehicles] and hence they do not automatically become Mahindra dealers. However, we would be considering these dealers for our network if they are interested. We will need a new distribution network and soon we will start a dialogue with potential dealers, including the ones who are signed up with GV, if they are interested in signing up with Mahindra.
Ford is in pretty good shape now and it’s quite clear that they’ll survive, provided they don’t fall under the huge amount of debt they have. But don’t be fooled that things are safe at Ford. Especially if you’re a dealer. Read More >
Fiat/Chrysler CEO Sergio Marchionne is an agonizing character. There can be no doubt that he’s one of the smartest execs in the business, and yet he so often comes off as the stuffy, pedantic college professor, who sputters into ad hominem at the faintest sign of criticism. His speeches often revolve around stock speaking points and a copy of Bartlett’s Familiar Quotations, and as the video above proves, his delivery is rarely inspiring. But between the Einstein quotes and plaintive self-sympathy, Marchionne can offer moments of unexpected candor. His speech to Chrysler’s dealers earlier this week offered several such moments, and though it’s too long (and, frankly, boring) to reprint in its entirety (click here for the whole thing), here are a few stunners from the mind of Marchionne.
I think there’s a decent business case if you take the long view
Chrysler Dealer Don Lee gives Automotive News [sub] his take on Chrysler’s pitch to new Fiat/Alfa dealers, thereby confirming that few dealers expect a Fiat franchise to take off in the short term. And for those “decent” long-term prospects, Chrysler’s saying that
a showroom of 2,500 to 3,000 square feet would be sufficient to start… To get there, some dealers are going to have to take it slower. They’ll have to offer a separate showroom but go beyond that as more product becomes available.
So, what will the 500 do for dealers? According to the Pentastar gang, dealers can expect
healthy gross profits of up to $1,500 on each Fiat 500
Lee reckons that figure is “optimistic,” but we disagree. Chrysler has said that 500s will start around $20k, and they’ll have to considering any US-bound 500 that comes out of Chrysler’s Toluca, Mexico plant could be sold for near double that price in Brazil. Per-car profit margins on US-market 500s will be strong… it’s the 50k projected annual sales volume (78k by 2013) that prospective dealers need to worry about.
Chrysler execs met with some 400 potential Fiat dealers today to discuss plans for a new network of Fiat and Alfa-Rome brand stores in the US, and as we have noted, a certain amount of overlap can be expected. Chrysler says that “as many as 200” stores could be opened for the Italian brands, but the company has only identified 119 metropolitan markets in 38 US states where it projects sales growth in small car sales. Even with only “about 165” stores planned for the initial rollout, quite a few markets could host dueling Fiat/Alfa stores. According to the NYT’s Nick Bunkley, Idaho, Iowa, Alaska, Mississippi, Montana, New Hampshire, South Carolina, The Dakotas, Vermont, West Virginia and Wyoming will not receive Fiat/Alfa dealerships. Meanwhile, the AFP reports that Chrysler plans to sell 50,000 Fiat 500s in 2011 alone, meaning each of the 165 stores will sell an average of 303 units per year.
Just days after Mahindra’s diesel-powered compact pickups were approved by the EPA for sale in the US, the Indian automaker apparently canceled its distributor agreement with Global Vehicles according to the message above that was posted to Mahindra’s Media site. Global Vehicles has had a deal to distribute Mahindra pickup and SUV models in the US since 2006, and has signed up 350 dealers to sell the Indian imports. Recently cracks in the relationship surfaced when GV sued Mahindra alleging that the manufacturer was delaying homologation for the US market. GV claims to have spent $35m preparing for Mahindra’s US launch, and dealers were said to have paid $200k apiece to obtain franchises. Meanwhile, Automotive News [sub] notes
The statement by Mahindra hangs a question mark over the 300 to 350 U.S. retailers who have signed franchise agreements directly with Global Vehicles, if the Alpharetta, Ga., company no longer is the distributor.
Nor is it clear that Mahindra has the power to terminate the agreement without a court fight.
The enthusiasm for the Fiat coming to the market has diminished. At first, it was something that would be mixed in… now [Fiat-Chrysler is] going to have to present a compelling story and product to back me investing at least $1 million to build a new showroom
Everyone loves the Fiat 500, but Chrysler’s dealers aren’t exactly thrilled that they have to build brand new showrooms to sell the Italian (er, Mexican) subcompact, as witnessed by the quote above in the WSJ [sub]. Another dealer adds that he knows enough troubled MINI and Smart stores to be spooked by the prospect of dropping hundreds of thousands of dollars on what will clearly be a niche offering. Yet another calls it an “excellent opportunity,” but Chrysler needs to find 200 qualified dealers to make Fiat’s American adventure a reality. The credit and car markets, gas prices and Fiat’s less-than-stellar American-market legacy all conspire against the scheme. To say nothing of the poor historical precedents for Chrysler’s ballooning brand portfolio. But as usual, CEO Sergio Marchionne has it all figured out…
When I had business at Volkswagen, arriving at Wache Sandkamp, I was always asked whether I have a cell phone on me. “Ja,” I said. “Does it have a camera?” “Nein,” I said. The guard didn’t want to see the phone, and I could keep it.
At Chrysler’s big dealer convention, to be held in September in Orlando, they won’t be so lenient. Dealers have already been told to leave all cell phones, video equipment and cameras in their hotel rooms. To ward off the intrusion of rogue recording equipment, metal detectors will be put up at the show’s entrance. Read More >
Well, the debate over the viability of the Chevy Volt has been well and truly joined, as political and auto writers around the web spent the last week weighing in on the issue. Needless to say, a scan of these opinions shows that my NY Times Op-Ed has drawn a wide variety of reactions, ranging from complete agreement to utter contempt. But, in a phenomenon that seems all-too common on the internet these days, very few commentaries on my opinion (positive and negative alike) bring more detail or nuance to the issue. Which is too bad, because I’d be the last person to argue that I’m capable of doing complete justice to an issue as complex as the Volt in only 900 words. The variables and unforeseeable consequences floating around the Volt’s future are so vast and varied, no writer could possibly hope to cover them all. And one such problem didn’t even emerge until the day after I wrote the Times Op-Ed: dealer markups on the Volt. Read More >
Sales numbers for the US market in July should drop today, and based on an early analyst survey, the market’s only recovered to a 12m SAAR at best. Estimates aside though, it’s beginning to look more and more like the US market for new cars is approaching a “new normal.” How so? Automotive News [sub]’s Jesse Snyder figures it’s
Because discipline is breaking out all over– at manufacturers, suppliers and dealerships.
Even Snyder’s headline captures the mood of cautious realism that’s suddenly taken hold of the auto industry: though the market appears to have moved towards 12m annual units in July, Snyder’s analysis is headlined Life at 11 million U.S. sales. Read More >
Have we scrutinized all the issues behind what they’re doing? Not really. My feeling is that a manufacturer-owned store as a business model violates the spirit of the state law here. But not a single person is complaining about it, and it’s kind of a back-burner thing for us. I imagine that if we start getting complaints from our membership, we would move it up to a front-burner thing
Tim Jackson, President of the Colorado Automobile Dealer Association tells Automotive News [sub] that Tesla’s non-franchise dealership in Colorado is not a long-term strategy, despite the company’s avowed desire to do without dealers. Well, franchised dealers, anyway (state law allows one OEM-owned dealership, and lots of EV tax breaks). Tesla admits (in its prospectus, no less) that wanting to own its own dealers will cause problems in Texas, but in the unlikely event that Tesla becomes a viable automaker, it’s easy to imagine a number of states putting up barriers to the franchise-free strategy. Especially since what we do know about Tesla’s dealer model plan is… highly irregular.
It is not at all clear that the greatly accelerated pace of the dealership closings during one of the most severe economic downturns in our nation’s history was either necessary for the sake of the companies’ economic survival or prudent for the sake of the nation’s economic recovery
Whoops! Who could have thought that the biggest political fight of the bailout era was picked over something never really needed to happen. At least, not according to the SIGTARP, the Special Inspector General for TARP, Neil Barovsky. In his latest report on the GM and Chrysler dealer cull [full document in PDF here], Barovsky explodes a lot of the myths surrounding the move to accelerate dealer closings, and even goes so far as to assign real blame… and not to GM or Chrysler either.
With President Obama set to sign a new financial oversight bill into law on Wednesday, the New York Times has dug into the bill looking for key oversights. Because auto dealers were exempted from the bill (thanks at least in part to their mobilization by the GM/Chrysler dealer cull), auto dealer finance tactics ended up square in the NYT’s crosshairs, and paper’s Your Money blog has a rundown of three of the most heinous of these tactics: the Yo-Yo, the Markup and the Add-On.
A lot of people have little or no respect for car dealerships. In fact, on the TTAC forums, I frequently hear the word “stealership” so much, that I’m herewith petitioning the Oxford English Dictionary to officially put it in our lexicon. I recall the story of a friend on mine who had trouble with a Honda dealership in the UK. His mother bought a brand new Honda Civic and in the final month before the 3 year warranty ran out, the alternator gave up. The mother wasn’t angry that such a failing had happened, she just wanted it fixed. But the dealership had other ideas. They weren’t convinced that it was the alternator and they couldn’t look at it until next month. The mother told her son (my friend) this story and the son though it was a bit of a coincidence that the dealership couldn’t look at the car until next month, which happened to be the month that the car came out of warranty. The son bypassed the dealership and wrote a very strongly worded letter to Honda UK (It could have been “extremely worded”. In the first draft, he threatened to run over their testes with a steam roller). Strangely, a week later, the mother received a phone from the dealership saying that they could look at her car, fix whatever needed to be fixed and throw in a free service. Now that’s a story with a happy ending. Now let’s try one a bit more turbulent, and this one comes from the land of the “stealership”, the United States. Read More >
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