Thursday, February 21, 2008

Watching and waiting

Chrysler dealers unsure of consolidation plan’s effect

By Lorraine Halsted
The Winchester Star

Winchester — Local Chrysler dealers say they have not been contacted by the corporate office about getting on board with a plan to consolidate the car manufacturer’s franchises.

Chrysler LLC has recently unleashed Project Genesis, an initiative that would eliminate duplicate models and mainstream dealerships, so that its brands —Dodge, Jeep, and Chrysler — would be sold under one roof.

The consolidation would be more cost-effective for dealers, who would eventually have fewer models to sell under a single brand, said Chrysler President and Vice Chairman Jim Press in his remarks to the J.D. Power and Associates Automotive Roundtable in San Francisco earlier this month.

"We do know that if the consolidation doesn’t occur before the products begin to go away, it’s going to be a whole lot more difficult for the dealers who don’t get involved early, to get what they want out of it," Press said, according to transcribed remarks provided by Chrysler Canada’s corporate office.

"In theory, it makes good sense," said Glenn Kochel, president and general manager of Clarke Motors, a Dodge dealership in Winchester.

A variety of Jeep models, manufactured by Chrysler LLC, sit on the lot in front of Kern Motor Company on Valley Avenue in Winchester on Wednesday afternoon. Local dealers say they have not been contacted by Chrysler’s corporate office about a plan to consolidate the car manufacturer’s franchises.
(Rick Foster)

For example, Kochel said the current setup puts him in direct competition with Parsons Chrysler-Kia in Winchester, which sells the Town & Country — an identical version of the Dodge Caravan.

"It doesn’t make sense to sell against each other," he said.

Right now, Chrysler manufactures several duplicate models sold under more than one brand, including the Jeep Compass and Dodge Caliber; the Dodge Nitro and Jeep Liberty; and the Dodge Durango and Chrysler Aspen.

Kochel said he has not been contacted by Chrysler and doesn’t expect a phone call from the corporate office anytime soon, since Project Genesis seems to be focusing on franchises in major cities with larger sales volumes.

"We are a secondary market, and it’s more of a metropolitan issue right now," he said.

Beverly Thacker, manager of sales, service, and dealer communications at Chrysler, said corporate officials probably have not contacted Winchester dealerships yet because they are concentrating on one market at a time.

Dick Kern, founder of Kern Motor Co., which sells Chrysler Jeep, said he has only heard about Project Genesis through recent media reports.

"I would be open to it," he said of the consolidation plan. "But the other franchises might not like it."

At issue is how Chrysler will go about consolidating its franchised dealerships.

In Virginia, companies cannot force its franchises to close, since they are independently owned, said Michael Allen, spokesperson for the Virginia Automobile Dealers Association in Richmond.

"Virginia’s laws make that pretty difficult to do without compensating dealers fairly, especially in Winchester, where most dealerships are family-run and a lot of them have been in the family three and four generations and have a lot of investments tied up in them, " he said.

Kochel said the consolidation would have to be voluntary for Virginia’s Chrysler dealerships, and that corporate officials would also have to bring money to the table.

"We are not going to force anyone to close their franchises," Thacker said, regardless of the franchise laws, which differ from one state to the next.

Chrysler has already consolidated 250 franchises in the past four years under Project Alpha, according to a recent report in the Detroit Free Press.

Thacker said corporate officials have not determined how many franchises or which of the 30 models under all three brands will be eliminated.

"Right now, it’s somewhat in a thought process of planning," she said. "The goal is to go into the market and see what’s needed."

Thacker said that current economic conditions have warranted the franchise and model reductions that will be brought about by Project Genesis.

The Detroit Press reported that sales of Chrysler vehicles were down 3.1 percent in 2007.

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