Dealers optimistic about Chrysler's future

Chrysler Group LLC dealers left the first large-scale meeting with the automaker's new management team Sunday encouraged by the executives' commitment to reviving the company, but braced for a product drought.

The meeting, held at the National Automobile Dealers Association annual convention, gave dealers a chance to voice concerns about the company, which emerged from bankruptcy protection last summer, and question executives about plans, products, marketing and incentive spending.

The mood during the two-hour closed-door meeting was mostly upbeat, a marked contrast to a year ago in New Orleans, when Chrysler executives urged dealers to order more vehicles when inventories already were high. Dealers ordered vehicles, only to see the company file for bankruptcy months later and terminate many of their franchises.

Chrysler Dealers Ask for New Ads to Slow Sales Plunge

An assortment of new vehicles sit at a Chrysler dealership in Rochester Hills, Michigan

Chrysler Group LLC dealers have asked the company to pull new television ads and restore regional marketing budgets after U.S. sales declined 25 percent in November, people familiar with the matter said.

Members of Chrysler’s national dealer council, an advisory body to the automaker, called for the ads to be stopped in a phone call with the Auburn Hills, Michigan-based company’s sales leadership this week, said two people with knowledge of the request who asked not to be identified because the conversation was private.

Dealers, frustrated that narrower incentives and plunging sales are hurting their profits, are pushing back against Chief Executive Officer Sergio Marchionne’s strategy. His five-year business plan, presented last month, aims to rebuild the company’s brands and reduce incentive spending. The transition could be “painful,” he said.

“It is a little difficult for us to understand because it is far different from what we were used to seeing,” said Larry Reid, owner of White Bear Dodge in White Bear Lake, Minnesota. Reid was not on the call with management. “The message to us is that it is branding, branding, branding, and maybe that will work.”

The advertisements, which began in September, focus on lifestyles, and dealers complained that some only briefly show vehicles. One that began running last month shows ticking clocks while a voice describes a Jeep owner’s desire to not be constrained by the daily grind. In the final moments, it shows a Wrangler along with the tagline “I live. I ride. I am. Jeep.”

Show Vehicles

The dealers would like to have Jeep, Chrysler and Dodge ads that show the vehicles more and highlight features, price and available bargains to counter marketing claims of other automakers, the people said.

Chrysler May Drop 145 Dealers on Lack of Inventory Financing

Chrysler Group LLC may have to terminate as many as 145 more U.S. dealers unless the retailers can find lenders to finance their new-vehicle inventory.

GMAC Inc., which replaced Chrysler Financial as the preferred lender for the Auburn Hills, Michigan-based automaker’s dealers, has been negotiating with Chrysler retailers, said Sue Mallino, a GMAC spokeswoman.

If dealers can’t get the financing from GMAC, they may lose their franchise agreement unless they can find another lender, said Kathy Graham, a Chrysler spokeswoman.

The outcome may mean fewer dealerships for Chrysler, which has about 2,400 U.S. outlets after terminating 789 as part of a government-aided bankruptcy reorganization. Chrysler exited court protection after six weeks on June 10 under the control of Fiat SpA. GMAC took over preferred financing duties for Chrysler dealers as part of the reorganization.

Of about 1,500 dealers that applied to Detroit-based GMAC to finance their vehicle inventory, about 90 percent will qualify, Mallino said. She said 85 dealers have been refused such financing and 50 to 60 others are still in negotiations.