Tuesday, July 24, 2007

Chrysler must get on same page as its dealers

Automotive News
July 23, 2007 - 12:01 amChrysler group officials still have work to do rebuilding dealer relations.

Since controversial sales chief Joe Eberhardt departed last December, Chrysler has taken important steps to improve relations with its disgruntled dealers. Chrysler listened to dealers and gave its advertising strategy a badly needed overhaul. It also has promised to simplify the dealer ordering process for vehicle equipment packages and narrow the gap between sticker prices and transaction prices.

But by banning 463 dealerships from closed factory auctions, the Chrysler group has shown it still doesn't fully grasp the depth of its problems with dealers. Chrysler officials like to dismiss many dealers as deadbeats who just aren't working hard enough to sell new cars.

Many of the dealerships banned from auctions are small stores in small towns, but many also boast high customer satisfaction ratings. Many of the dealers have been in business for a long time. They are trying to do a good job serving their customers. They want to sell new cars. But they say Chrysler's policies have forced them to lean more heavily on used-car sales to remain profitable. They say Chrysler's policies often make it more difficult to earn a profit.

The small-town dealers also complain that the Chrysler group favors big-city stores on hot models, such as the four-door Jeep Wrangler. Chrysler counters that the Wrangler has been so hot it can't keep up with demand.

With policies such as its "volume performance allowance," which pays bonuses to dealers who meet a sales target, Chrysler has created a two-tier dealer network with haves and have-nots. Some dealers say Chrysler has arbitrarily doubled or tripled their sales targets, making it impossible to meet their goal.

Dealers also say the company's sales reps withhold hot-selling models unless the dealer also takes slow-selling dogs.

Dealers who have chosen not to play Chrysler's game have found it harder and harder to keep up. If they don't meet Chrysler's targets, they don't get the marketing money.

The Chrysler group has made a real effort to listen to its dealers. But often it pays more attention to the dealers who tell the company what it wants to hear, not what it needs to hear. That must change.

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