As previously reported, Chrysler's new task masters are getting tough in their efforts to cull the automaker's 3700 member U.S. dealer network. After excluding under-performing Chrysler stores from the company's dealer-only used car auctions, Sales Suit Steven Landry has sent 173 dealers formal notification that they have to increase sales in six months or else (i.e. lose their franchise). Hang on. That's not it. "We're not going after any dealers to get rid of them," Steven Landry told The Detroit Free Press. "The notes that we sent out say that you are under-performing by a very high degree compared to other dealers in your market, and we'd like them to improve their performance." The question is: how? Surely providing dealers with vehicles people want to buy is the best way to improve their performance. Surely putting so much pressure on the dealers that they cut corners, screw customers and sully Chrysler's name for decades to come is the worst possible solution. Oh wait. Private equity firms don't think long term. Right. Carry on.  

We've long argued that Cerberus Capital Management will do whatever it takes to stem Chrysler's cashflow cataclysm.  The Wall Street Journal reports that the Chrysler Group's new management team is giving their poorer-performing dealerships six months to improve sales or face closure. Chrysler has already banned 450 or so so-so dealers from their used car auctions in an attempt to force them to sell more new cars. The warning signals the next step in their campaign to cull underachievers from the automaker's bloated ranks. Like GM and Ford, Cerberus wants to "encourage" smaller dealerships to merge with larger ones. That said, Cerberus better walk softly with that big stick. Car dealers are protected by state franchise laws; dealer groups wield a mighty checkbook at the state level. 

The court case pitting Ford against engine maker Navistar continues, as both sides wrangle over liability for $800m worth of warranty work performed on Navistar's 6.0-liter diesel. According to Dealer Magazine's resident legal expert, Navistar's looking to lay blame for the big ass bill at the doorstep of Ford dealers for performing unnecessary repairs, failing to follow proper repair procedures and, in some cases, not actually doing claimed repairs. Rich Sox says Navistar's subpoenaed 24 dealers (his clients) in Florida, Georgia, Ohio and Texas requesting thousands of pages of warranty documents. Sox' dealers aren't happy about the prospect of Ford and Navistar pawing over their warranty records– not because they have anything to hide, right? "Of course, we have to be careful how we object to these subpoenas. It would not go over very well with the judge to argue that the warranty records shouldn’t be produced because dealers may have done something wrong." Sox' strategy: resist the legal request on the grounds of confidentiality, inappropriateness (go after Ford first) and, failing all that, squeeze some money from the deal (make sure Navistar pays for the time and expense of assembling the paperwork). And that's why Sox gets the big bucks.   

The Smart Automotive Group [website "under construction," no relation to the SMART city car] got more than a slap-on-the-wrist for sending out "promotions" on behalf of Georgia car dealers. The Governor’s Office of Consumer Affairs (OCA) whacked owners Michael and Ben Burst $1,660,320 each for violating the Fair Business Practices Act. Specifically, the Louisiana agency arranged ads that claimed ordinary sales were "liquidations" or "Georgia's only reprocessed vehicle event," told consumers they'd won cars they hadn't, misrepresented the monthly payments and the number of cars available for sale and claimed customers were preapproved for loans when they weren't. And this is AFTER they told the OCA they were no longer doing business in the state. Nice how the dealerships can shuffle off the blame to the advertising company, when they approved the ad copy and benefited from its mischaracterization.