A tale of two dealers — only one is spared

....“My guess is whatever sales this guy has were based on personal and
traditional relationships. Their sales are incremental and made through
those personal contacts,” he said. “Once that’s gone there will be no
allegiance to any Chrysler product.”...




A tale of two dealers — only one is spared
http://www.msnbc.msn.com/id/30851123/

Chrysler axes 87-year-old Pa. franchise, spares more modern neighbor
By Eve Tahmincioglu
updated 7:32 a.m. ET, Tues., May 26, 2009

Two very different Chrysler dealerships, separated by just seven miles
in southeastern Pennsylvania, are facing two very different fates.

Weathers Dodge in Lima, Pa., is 87 years old and offers a trip back to
the 1940s, with its terrazzo floors, wood paneling and employees who
seem to know every customer’s name. Just down the road in Glen Mills is
David Dodge, which opened in 2005 and features more of a 21st century,
big-box look, with its flat-screen TVs and freshly brewed Starbucks coffee.

One of these two dealerships got bad news and the other good news from
Chrysler May 14 when the bankrupt automaker notified nearly a quarter of
its 3,200 dealers that they would be dropped from the Chrysler family.

In Lima, Larry Weathers III opened an overnight letter from Chrysler
headquarters with his 78-year-old father, Larry Weathers Jr., by his side.

“It is with a sense of profound sadness that we must take this step and
reject some of our dealer Sales and Service Agreement(s)," the letter read.

Father and son stood shocked in the dealership that has sustained three
generations of Weathers. They knew Chrysler was expected to dump
dealerships as part of its restructuring under Chapter 11 bankruptcy
protection, but neither expected the company would take away the
franchise of one of its oldest dealers.

“When I read the letter out loud my father sank below the floor. There
were tears,” the younger Weathers recalled. “I was upset. I lost the air
in my lungs.”

At the same time David Kelleher, owner of 4-year-old David Dodge, was
opening a letter with more favorable news.

“We are pleased to inform you...," the letter said. "You can remain our
dealer as we move forward with establishing a new company.”

Kelleher, who considers himself a friend of the Weathers family, was
happy to read the letter, but he wasn’t surprised. “With all the work
we’ve done here, I couldn’t imagine another scenario for us,” he said.

He also was not surprised because at 8 a.m. that morning a regional
company official called him to let him know in advance that his
dealership and a second location he owns, David Chrysler Jeep at the
Philadelphia Auto Mall, would remain part of the Chrysler family.

The Weathers got no such advance phone call, or any call at all.

The impersonal letter was how they found out their nearly
nine-decades-old partnership with Chrysler was over, and that the future
of Weathers Dodge, a fixture of the Lima community for decades, was unclear.

When he was interviewed a few days later, the younger Weathers was still
angry about the way the situation was handled, and his father was not
available for an interview.

The way the situation was handled still irks the younger Weathers.

“We just got the ax," Weathers said, grabbing onto a photo of his
grandfather, Lawrence Weathers, Sr., who started the dealership in 1922.
"They didn’t even take our history into consideration. It’s hard for the
human brain to find common sense in it.”

Clearly, Chrysler’s decision to shutter 789 dealers across the country
was not about sentiment but about trying to save the foundering company,
which is operating with $9.3 billion of federal support. At least that’s
how the company and auto experts frame it.

“It’s not a reflection on the dealership,” said Kathy Graham, a Chrysler
spokeswoman who explained the company's thinking, although she would not
comment on any specific dealer situations. The decision to end the
franchise relationships was “data driven,” taking into consideration
everything from customer satisfaction to the number of brands under one
roof.

Chrysler has not provided any specific details about how executives made
the final decisions. But the treatment of the Weathers, a longtime
Chrysler dealership family that consistently exceeded the company’s
minimum sales requirements and had 35 “Five Star” service awards, offers
a glimpse of where auto retailing wants to go.

It’s about the future, not the past. And dealerships like Weathers will
increasingly be the ones left out in the cold, while upstarts like David
Dodge are rewarded.

Weathers Dodge, which has sold an average of 310 new vehicles a year
over the past three years, was built in the mid-1940s. Aside from
upgrades such as a new roof and boiler, it looks very much the way it
did back then. The building, at about 12,000 square feet, has eight
service repair bays and a cozy and nostalgic feel.

Despite being encouraged by Chrysler brass in the past to make more
changes, Weathers had yet to make any major renovations. “We always
focused on the customers, the good old-fashioned way," he said.

By contrast, David Dodge, which has been selling an average of 984 new
vehicles a year, includes 20,000 square feet with 15 repair bays and a
large vehicle lot. With the flat-screen televisions, including one in a
separate kids’ playroom, "it’s all about the customer experience,”
Kelleher said.

Kelleher's road to becoming an auto dealer was a far different one than
the one traveled by Weathers.

For Weathers it seemed predestined. At age 11, with both his father and
grandfather in the business, he began working in the dealership’s detail
shop during the summers and part time.

After graduating college in the late 1970s and serving as an officer in
the Navy, he went to work at the family business full time in 1982. He
now co-owns the business with his father.

Kelleher, whose father was a bailiff and mother a schoolteacher, says he
got into the business by accident. Originally from Boston, he came the
Pennsylvania for college, where he studied political science with plans
to become a lawyer and then go into politics.

After college, he ended up working at a dealer to make extra money.

"I saw an ad that read 'make $50,000 first year' (and) answered it
knowing it was a lead-on," he said. "The first year I made $82,000. I
moved to management shortly thereafter."

Kelleher bought into a partnership at a Havertown, Pa., dealership in
1998, and in 2005 he bought his own Dodge dealership and immediately
upgraded it with a new facade.

Experts say that Chrysler dealerships need to be larger today to house
the company's three major brands — Chrysler, Dodge and Jeep — a goal the
company has been pursuing for the past five years with its Project Genesis.

Weathers says his dealership could have handled the three brands with
slight renovations, but he maintains Chrysler told him that they
“couldn't give us the other franchises since we were too close to others
or they were not available.”

Both Weathers and Kelleher have been keeping costs down and holding
their own despite taking some hits to the bottom line.

Sales at Weathers are off 24 percent, compared with an average Chrysler
dealer's decline of 35 percent, says Weathers. Despite the decline, the
dealership has not laid off any of its 29 employees.

Kelleher says his staff has shrunk to 38 from 125 last year, mainly
through attrition, as monthly profit increases have fallen to 0.8
percent, from about 4 percent during good times.

Chrysler spokeswoman Graham says profits were not an “overwhelming
factor” in the company's decision, but some industry watchers believe
the smaller volume of a dealership like Weathers' must have been a factor.

“When they looked at dealers they looked at size and sales, the ones
selling lots of cars,” said Mike Boudreau, a turnaround expert with
O'Keefe & Associates in Bloomfield Hills, Mich.

Others say that approach would be shortsighted.

“It costs them very little to keep this guy,” said George Hoffer,
professor of economics at Virginia Commonwealth University, referring to
Weathers Dodge.

“My guess is whatever sales this guy has were based on personal and
traditional relationships. Their sales are incremental and made through
those personal contacts,” he said. “Once that’s gone there will be no
allegiance to any Chrysler product.”

Indeed, customer loyalty has kept Weathers Dodge in business. After
local television stations descended on his dealership last week to
interview Weathers about the loss, he was flooded with e-mails and phone
calls from customers, community leaders and even other area dealerships.

Even Kelleher was upset by the decision to eliminate Weathers Dodge,
where he once sent family members to buy vehicles.

“I consider Larry and his dad to be my friends,” he said. “I could not
disagree more with the Weathers decision, it’s sickening. But they have
a knife right now and they’re cutting.”

While some Chrysler dealers plan on fighting Chrysler's effort to
eliminate them, Weathers has no intention of joining them.

Losing the Chrysler franchise as of June 9 means he will not be able to
sell new Chrysler vehicles or do any warranty work on the company’s
cars. It will be a heavy blow to his business, but he plans to focus on
selling used vehicles and offering service, and looking for another auto
company, possible a foreign maker, to work with.

It’s unclear if Weathers will be able to ride out the storm, and he’s
not sure what that will mean for his family, his staff, or for the many
community groups he’s donated to and volunteered with over the years.

Ironically, a week before the rejection letter arrived, Weathers Dodge
was named 2009 Family Business of the Year by the Delaware County
Chamber of Commerce.

“Companies like Weathers represent the county, sponsoring local little
league teams, employing people here for decades,” says Jeff Vermeulen,
president of the chamber. “If they leave the area it would just be a
tragedy.”

Weathers, who has four children with the oldest in 12th grade, is
confident he’ll come back bigger and better.

“I have to turn the page and move on,” Weathers says, choking up and
brushing away a tear. “It’s all about how you deal with things in life.
Every second you put toward that negativity is a second you don’t see an
opportunity.”

In an e-mail, he added: "It is not about fancy buildings and expensive
front doors. Maybe that is why many dealers and Chrysler are in
trouble. What is lost in the world today is the basics that the country
was built on. Principles, morals, hard work, honesty and integrity. We
have been a sturdy, hard working, dependable, superior performing
dealer. Did you ever hear the story of the tortoise and the hare? The
hare never wins."

 

A tale of two dealers — only one is spared

Again, here is Chrysler saying that what it costs them to have a dealer
is either negligable or had no influence on this decision to revoke 25%
of their franchise agreements.

Chrysler won't have a future if it irrationally kills it's retail sales
channels.

So we don't know how many they sold in 2008. Remember what I posted
earlier - that 50% of the 789 dealers to be closed sold fewer than 100
new vehicles in 2008. The Weathers dealership would appear to have
sales significantly higher than that number.

I think that's bullshit.

It's all about the bottom line. Chrysler doesn't care how nice and big
your service bays are. Chrysler just cares if you sell their new cars.
But paradoxically they're going to kill some fraction of future sales
potential. And for what?

Why?

This guy was selling 300+ Dodge vehicles a year. If you want him to
sell Chrysler and Jeep, then fucking give him those franchises too, like
he's been asking for.

Who the hell is running Chrysler anyways?

Chrysler management and executives should be shot.

Again, Chrysler is killing the geese that give them the golden eggs.

-----------------
http://www.albertalocalnews.com/red...d_biz/Chrysler_sheds_US_dealers_45059762.html

Chrysler wants to shed 789 dealerships by June 9. Many of the dealers’
sales are too low, the automaker said, with just over 50 per cent of
dealers accounting for about 90 per cent of the company’s U.S. sales.
More than half of the dealerships being eliminated sell less than 100
vehicles per year, they said, and account for 14 per cent of U.S. sales.
Chrysler said in its filing that dealers are not competitive enough with
foreign brands. Chrysler sold an average of 303 vehicles per dealer in
2008, according to its filing. By contrast, Honda Motor Co. sold about
1,200 vehicles per dealer, while Toyota Motor Corp. sold nearly 1,300
per dealer.
-----------------

Bingo.

Just what does it cost Chrysler to allow these dealerships to keep
operating their franchises?

Bingo again. As I said in a previous post, look for those dealers to
acquire foreign franchises like Toyota, Honda, Kia, even VW. The
Chrysler dealerships to lose their franchise seem to be located mostly
in rural areas. They're probably not close enough to existing foreign
dealerships to violate their territory.

Pulling these franchises is going to be a big PR bomb for Chrysler. At
a time when Chrysler and GM need all the good PR they can get, they're
doing shit like this.

This can only result in lower overall sales for Chrysler and GM.
Closing these dealerships can only mean shrinking their share of the
total sales pie.

These people will not just walk away from their investment. They will
continue to sell used cars, they will continue to perform non-waranty
work on Chrysler and GM cars, and probably half of them will take on
other franchises. There are many new vehicle startups (micro-cars,
green cars, electric, hybrid, etc) that are coming on-line and will need
a dealerhip network.

Bingo again. Good call.

I've read several accounts where Chrysler and GM dealerships were forced
by Corporate to spend hundreds of thousands, even a million or two on
upgrades just last year, only to be told now that their franchises are
being revoked.

 

Brand loyalty will be zero after the blood bath.

 

he plans to focus on selling used vehicles and offering service,

Aren't there some Chinese auto manufacturers planning on selling cars
in the states?
And Indian companies?

It seems to me that by taking away these franchises, Chryser is asking
for MORE competition.

 

My exact thoughts.
However I note that:

Were they stuck in the past?
It would be very interesting to deal with these two dealerships and note
the differences.

Near me is a Chrysler dealer from the past. They came to Chrysler from
American Motors, have a great sales location, but an inferior shop. As
it was from the 70s when I first saw it. Their location is small so it
would be difficult to built a proper sized modern sales service building.
I sometimes buy minor parts there, but often they don't have it in stock.
I would expect them to be dropped, but they do move stock because of
their great location.
I certainly don't take my Chrysler in there for a significant repair.

 

Hi!

And that is probably why one survives while the other closes.

....but you know what? I think I'd rather shop at the older dealership. I
realize that I'm probably in the minority, but keeping it simple (as it
sounds like the Weathers have) is what I like. So few new car dealers keep
it low key any more...

Hopefully they'll be able to continue their business and support themselves
by doing something else. Maybe if Chrysler recovers they can rejoin the
company.

William

 

Now we have some more information about the government-operated
Chrysler's criteria of dealers that were closed versus those that were
spared. This is really fascinating stuff!


-----
Dealers who give to Republicans much more likely to be shuttered

As part of its Chapter 11 bankruptcy, Chrysler is terminating one-fourth
of its franchises – but some say its catalog of doomed dealerships looks
more like a hit list that specifically seeks to put Republican donors
out of business.

Chrysler will now be eligible for up to $8 billion in taxpayer-funded
federal aid. The federal government has already provided $8.58 billion
to Chrysler and Chrysler Holding between the months of January and May
of this year. The Treasury also loaned $1.5 billion to the automaker's
lending arm in January.

President Obama has said the bankruptcy will give the company "a new
lease on life," after his administration spearheaded a plan requiring
the company sell to Italian automaker Fiat. Chrysler's stronger
operations will be owned by Fiat, labor and the U.S. and Canadian
governments. The sale could close as early as this Friday.

Obama said the bankruptcy would be a "quick" and "efficient" step toward
Chrysler's "survival."

"The necessary steps have been taken to give one of America's most
storied automakers, Chrysler, a new lease on life," Obama said. "This is
not a sign of weakness."

But WND reviewed the list of 789 closing franchises and databases of
political donors and found that of dealership majority owners making
contributions in the November 2008 election, less than 10 percent gifted
to Democrats while 90 percent gave substantial sums to Republican
candidates.
..........

FULL ARTICLE http://www.wnd.com/index.php?fa=PAGE.view&pageId=99325

 

The conclusion that the article is suggesting *may* or *may not* be
true. It shows how statistics can be abused. For example: What if
Chrysler dealership owners across the board tend to donate to Republican
candidates - IOW 90/10 statistic of the closed dealerships may in fact
be *true*, but it may be that it's statistically 90/10 Repub/Dem
donations for *all* Chrysler dealerships - ones that are bing closed and
ones that are not being closed.

I'm not saying that that is necessarily the case, but without giving all
the statistics to establish that other part of the picture (i.e., what
was the Repub/Dem giving ratio of the dealerships that are remaining
open?), the article is being nonscientific at best, dishonest at worst.

It's kind of like saying: "30% of accidents involving injuries or
fatalities involve drinking. That means that 70% of such accidents do
not involve drinking - *THEREFORE* the roads would be safer if people
made a point of driving while drinking.

 

All your many words can be summarised by one:

CONSPIRACY

DAS

To send an e-mail directly replace "spam" with "schmetterling"
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