Re: Jim Press attacks Chrysler dealer myths

Just Facts wrote:

Jim Press attacked several ³dealer myths² in front of Congress,
defending Chrysler¹s actions:

1. Was discontinuing these dealers really necessary to Chrysler¹s
survival? Press noted that the company¹s sales had fallen dramatically
that the dealer channel as a whole was losing money, and that without
profits, dealers could not invest in training, people, or facilities,
hurting customer satisfaction.

Those are dealerhip problems - not Chrysler's problem.

2. Do dealers really cost anything? The answer is, yes,
primarily due to extra marketing, advertising, and administrative
costs (together, $183 million per year according to Press)

Load of garbage. So that means Chrysler can now advertize 25% less, and
still have the same consumer impact?

Then if they reduce their dealerships by 99%, then their advertizing
costs will also drop by 99% too, right?

Administrative costs? How many white-collar admin people have been let
go by Chrysler in the past month, or will be let go during the next
month?

What about all the bad press that came with those dealership closings?
How much will that factor into their near-term future sales?

There's more to this here:

http://www.msnbc.msn.com/id/31187368/

=========================
Jim Press, Chrysler?s vice chairman and president, testified before a
Senate committee last week that the poor performance of many of the
dealers the automaker wants to eliminate costs the company $1.5 billion
in lost sales each year, along with $150 million in advertising and
marketing costs and $33 million in administrative costs.

Press also attributed product engineering and development costs of $1.4
billion over four years to the dealers in question.
==========================

Someone please explain how the dealerships to be closed has "cost
chrysler $1.5 billion in LOST sales each year" ???

Someone please explain how Chrysler's $150 million in advertizing is for
the benefit of only the dealers to be cut, and doesn't benefit ALL
dealers?

Someone please explain how the dealerships to be cut are the reason why
Chrysler spent $1.4 billion over 4 years for product development?

I guess the 75% of the dealers to remain didn't also benefit from that
same product development?

Hey, I guess that means that Chrysler can now spend ZERO on product
development once these dealers are let go - right?

Oh yea, I guess the fact that they GAVE THEMSELVES AWAY TO FIAT JUST TO
GET A SMALL CAR PLATFORM doesn't count as product development.

as well as the need to have ³sister vehicles² (Dodge and
Chrysler or Jeep and Dodge versions) which he claimed added
$1.4 billion in product engineering costs over four
years.

Chrysler cut their product development deep and wide during the past 4
years. As a result, they have no sub-compact to offer. They did
nothing to de-engineer the extra weight and bulk of Mercedes-sourced
parts out of their LX chassis during the past 2 years.

Chrysler thinned their product divisions and models too much during the
past 10 years, to the detriment of their dealer network and their own
sales potential. When dealers were screaming "give us new products to
sell", Daimer was too busy trying to figure out how to put more Tonka
and Fisher-price into Chrysler's cars during 2003 and 2004, and instead
of the classy 300n (available in both FWD and RWD on an LH platform) we
had the 2-ton 300-Bentley (and bye-bye Plymouth).

3. My dealer said he was profitable, why not keep him? Press
said that in general the dropped dealers were the least profitable
in the network.

But wait. Didn't you just say that as a whole, the entire dealership
network was losing money?

Could these dealers, that were responsible for only 14% of total sales,
could they really be losing *that much* money to tip the whole network
into the red? Give me a break.

Why mot wait for those dealerships to fail, because surely they would
soon fail - no?

Those that were profitable were often losing money on their
new car business and making it up from used cars.

So let them operate that way. That's none of Chrysler's concern. See
more on this exact point below.

Does Chrysler think that the remaining dealers are going to recapture
that 14% of sales?

Or did they feel compelled to show the bankruptcy judge that they were
willing to something really dramatic to "save the company" and this is
the best idea they had?

1. Many were in poor locations

Irrelevant. Their locations were good enough once upon a time for
Chrysler to give them a franchise. If it's bad location, then why
didn't they go bankrupt last year?

2. 555 were standalones, not viable in the future without all
three brands

Then why didn't they go bankrupt last year?

3. Half sold fewer than 101 vehicles per year

Then why didn't they go bankrupt last year?

4. 44% sell competing brands in the same showroom; of those,
Chrysler is only 12% of their business

And now those dealers will sell 0% Chrysler cars and 100% competing
brands.

How is that going to help Chrysler's sales numbers?

==================
(...) some cities prohibit dealers from selling used cars unless they
sell new ones as well, forcing them to close those operations too.
=================

And did the bankruptcy judge take that little nagging factoid into
account?

So now we see a real glimse here into what's going on. It's the glut of
used cars on the market that is the real problem for Chrysler and GM.
Take some franchise agreements away and you are also reducing the
availability of used cars.
.

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