Looks like they are trying to get rid of underperforming dealerships by telling them to put up sales numbers or else...

http://online.wsj.com/article/SB1185322 ... lenews_wsj

I don't see what difference it makes, if a dealer only sells 10 units a month, thats 10 more sold than if the dealer didn't exist. The dealerships are privatly owned, no cost to the company. I may not be seeing this right, but one car sold is one more than they had.

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Not exactly. I am in real estate franchising and that applies somewhat here...

The cost of keeping an underperforming franchise is probably much greater than the income created from selling 10 cars. Keeping the doors open requires constant customer service (the dealer being the customer in this case), administrative costs, contract negotiations, education, site visits, etc. All of those services cost time and money and without enough sales it might just not be worth it.

The other aspect is consumer perception. If would-be consumers have a negative view of Chrysler because of their underperforming local dealership then that is perhaps the most costly aspect of all. Maybe the dealership has terrible advertisements or does not advertise at all in the local market. Maybe they just have such a bad service reputation that customers won't go near it. Now you have an entire town that has a negative view of the Chrysler name just because of one bad owner. It is VERY costly to have a private owner completely grenade your branding efforts in one small pocket of the world. If it is happening a lot of places then something needs to be done.

In that case, if Chrysler enforces/imposes quotas then the local dealership has two choices...get its act together or get out of the business. In turn, Chrysler now has a more productive dealership OR has the option to replace the still underperforming dealership with a new one (that maybe sells 20 cars).

Anyway you look at it...probably a win, win for Chrysler.

A lot of times if you have two/three dealers in any given market then one may be "under performing" and taking business away from the other two in a way. All companies do this and they are just trying to keep the profits up. Too many dealers you sell for less to sell a vehicle. BUT if the consumer only has one or two places to go to then prices are kept higher. Look at Harley Davidson, uesd to be alot of "mom and pop" dealers out there that had sold for 40/50 60 years, now HD wants new buildings, have to close to the interstates etc. You either build a new building and move or sell out to someone who will.

tom

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IMO at this point find out who are the "under preforming" dealers and go buy a Jeep from them NOW
that way they will give you a real good deal to move a Jeep and keep their #'s up to look good to Chrysler
and if they do close there will probably be a dealer close enough to go to for warranty work

I guess IMO this could be only bad for the dealer not you or chrysler
maybe in a few years when they are not "a dime a dozen" it will not be so good for us

There are 3 Jeep dealerships all within 15-20 minutes from my house. I'm sure they have to do a lot of price cutting or something to sell a vehicle since it wouldn't be that hard to go up the street to a different dealer. With that said though, the two smaller dealers can barely keep Jeeps on the lots sometimes where as the larger dealer always seems to have more selection (they are owned by a local group that has five or six dealerships in the metro area that sell nearly every make there is.) So who do you think they would try to push out? I just don't know though if the reason for the smaller dealers' lots being so empty is because they don't carry a lot of stock or they really are selling well. But the one I go to for service also won an award from Chrysler for it's service dept two years ago. So there is definitely a lot of competition around here for the sale. They might all be performing well though since about 1 in 7 vehicles driving down the road around here are Jeeps of some kind.

On a side note, when is the takeover by Cerberus supposed to be complete? I like the new commercials with the Jeeps driving in the background of famous scenes through history. But I noticed at the bottom of the screen it still says Daimler-Chrysler.

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David
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