official Chrysler plan to reduce Dealership numbers
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official Chrysler plan to reduce Dealership numbers - 2/8/2008 1:57:02 AM
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HankL
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Joined: 8/20/2005
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Chrysler will trim products, dealers
Bradford Wernle
Automotive News |
February 7, 2008 - 5:28 pm EST
DETROIT -- Chrysler LLC is rolling out a dealership consolidation plan
teamed with a sharp reduction in the product lineup that would allow
more retailers to sell all three Chrysler brands under one roof.
Project Alpha, the company’s previous consolidation strategy, has been
scrapped. In its place is a new program called Project Genesis, which
will impact all parts of the business, including product planning,
manufacturing, and marketing.
Business teams have begun fanning out to help dealers arrange to buy or
sell franchises to speed up the process.
In meetings with dealers around the country last week, Chrysler
executives described the program as “Project Alpha on steroids.”
“Genesis incorporates the whole company getting on the same alignment
with the same overall strategy,” said Chrysler co-President Jim Press in
an interview Thursday. “The dealer network component is a piece of an
overall plan.”
Project Genesis is intended to match Chrysler’s products with a
realigned dealer network — and its reduced production capacity. In the
future, that product portfolio will be geared to dealers who sell all
three brands under one roof. Chrysler now has about 3,600 dealers.
“To have the most profit and viability, you have to have all three
brands under roof to get the full lineup of Chrysler Corp. everywhere,”
Press said.
That means Chrysler will look to eliminate duplicate models on the same
platform. Dealers attending the meetings say Chrysler will cut the
numbers of duplicate cars, SUVs and crossovers. Press said Chrysler
won’t just cut products. It also will develop new ones in segments where
it doesn’t have current entries.
Metro areas targeted
Project Genesis will be aimed primarily at major metro areas and
secondary markets — regions where Chrysler added lots of dealerships
during the 1970s and ’80s. But those dealerships, many of them
single-brand stores, have struggled as Chrysler’s market share has shrunk.
Business teams will descend on those cities to help dealers arrange to
buy or sell franchises to make the consolidation happen. Chrysler will
draw on its own resources and those of its parent, Cerberus Capital
Management LP, to assemble the teams. The advisers will be chosen for
their expertise in areas such as real estate, taxation, investment
planning and estate planning.
“We’ve done a couple of market meetings already,” said Steven Landry,
executive vice president of North American sales. “Each of the business
centers will hold metro market meetings” and review the volumes in those
markets.
He said Chrysler will then hold “individual meetings with dealers and
review whether they want to be a willing buyer or willing seller.”
Fewer points on the map
In meetings with dealers this week, Press and Landry used the Boston
metro area as an example. And the cuts apparently would be deep. Boston
now has about 22 dealers with Chrysler franchises; the company would
like to see that number cut to eight, each selling all three brands.
“Competition has put us in the position where dealerships are seven,
eight miles apart,” Landry said. “We want them to be 25 miles apart.”
Landry and Press said the mileage figures were approximate and would
differ from one market to the next.
Among the ideas Chrysler is exploring are satellite dealerships and
service-only outlets, Press said.
Getting dealerships to combine is often a tricky process because buyers
and sellers often can’t agree on how much a deal is worth. Project
Genesis will not be a “push program,” and there will be no deadlines or
timetables. Nor will the company open the Cerberus bank account to
dealers, Press said.
“We have to be clear that we don’t have a big checkbook,” he said.
“We’re not in the financial position to make this a big bunch of checks
and paydays. We need to do it with a process of working together looking
at alternatives.”
Since Chrysler launched Project Alpha in 2004, Chrysler completed about
250 Alpha combinations and trimmed its dealer body from about 4,000 to
3,600.
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