Chrysler dealers optimistic, yet worried, after meeting with new management team at convention
As he walked out of an auditorium Sunday afternoon, Grant Irwin Sr. pretty much summed up the feelings of Chrysler dealers who had just spent two hours listening the automaker’s new management.
The 73-year-old dealer from Northwest Oklahoma said he’s impressed by the executives installed by Fiat and Chrysler CEO Sergio Marchionne, and optimistic about new cars and trucks that are coming.
But he’s also wondering about the short-term, which he and other dealers somehow must survive with an aging model lineup that pushed sales down 36 percent last year.
“We’re struggling,” said Irwin, who runs a Chrysler-Dodge-Jeep dealership rural Woodwind, Okla., about 140 miles from Oklahoma City. “We’re going to sell less cars.”
Dealer after dealer who exited the annual meeting at the National Automobile Dealers Association convention in Orlando, Fla., said they were happy with what they heard, but also said executives didn’t offer any options to help them get through the next six months to a year when new products are scheduled to arrive.
Chrysler sold only 931,000 cars and trucks last year, down from 1.4 million in 2008. January sales were even worse, only 62,000 for the month, down 55 percent from the same month in 2009.
“I think there’s a lot of good things coming,” said Paul Walser, who runs a Chrysler-Dodge-Jeep dealership in Hopkins, Minn., near Minneapolis. “I think we’re all wondering what the journey looks like between now and the time when all the product starts to arrive.”
Chrysler plans to have 16 new or significantly redone models by the end of this year. The company has high hopes for a new lighter, and more efficient, Jeep Grand Cherokee that is coming around June. A redone Chrysler 300 and Charger, the new Fiat 500 minicar and a new Dodge sport utility vehicle are expected later in the year.
The dealers heard presentations on advertising, marketing and incentives from Fred Diaz Jr., who runs the Ram truck brand and is Chrysler’s top U.S sales executive, and Olivier Francois, who heads advertising and the Chrysler brand.
They told the dealers they are projecting sales this year at just under 1.2 million, up a little from last year. The company, the dealers said, still has $5 billion in cash and has reduced its expenses and gained efficiencies so it can break-even at just over a million in annual sales.
Many dealers said they will have to adjust the same way, keeping overhead low and making money on used cars and service, if they want to survive. Others are hoping for better incentives so they can sell more vehicles by offering great deals.
“Some dealers I think were pretty encouraged and others are frustrated,” said Walser. “We’re kind of playing defense, I think, for the moment.”
Dealers who are totally reliant on Chrysler Group LLC brands, Chrysler, Jeep and Dodge, were a little more frustrated because they’re totally reliant on the company, said Walser, who also runs Toyota Motor Corp. and other franchises.
Some dealers said they were skeptical of recent advertising campaigns, which were humorous and focused more on brand identity rather than touting Chrysler’s products. Some wondered how the brand advertising would help them sell more cars.
Chuck Eddy Jr., a Chrysler-Dodge-Jeep dealer in Youngstown, Ohio, said he had good sales last year by marketing deals, helped by incentives from the company such as rebates and low-interest financing. He’s hoping for increased incentives to help make it until the new vehicles arrive.
“Our buyers are loyal because they like the deal,” Eddy said. “We’ve got to get to the new product so we don’t have to worry so much about selling the deal.”
Dealers said they have been forced to become survivors by holding franchises from a company that has been through so much turmoil. Chrysler was bought by Germany’s Daimler in 1998, a marriage that unraveled in 2007 with the sale to New York private equity firm Cerberus Capital Management LP. Cerberus gave up on the company last year as it headed into Chapter 11 bankruptcy protection. Propped up by aid from the U.S. government, Chrysler came out of bankruptcy under control of Fiat. Dealers said the company is paying for the Cerberus years when little was invested in new product.
Mike Andretta, owner of a Chrysler-Jeep-Dodge dealership in central Pennsylvania, said most dealers realize they have to have faith in the new management, which is completely different from the group that last year bent dealers’ arms to buy more vehicles to reduce Chrysler’s inventory and justify government aid.
This year, he and others said, there were no pleas to take on more vehicles.
“I think we need to give the new guys time,” he said. “Because it truly is a new company.”