LAS VEGAS ‚ÄďGroup confesses its sins ‚Äď again ‚Äď but all still is not forgiven, as evidenced by an ‚Äúupbeat‚ÄĚ meeting where top executives faced some tough questions.
‚ÄúThey did, of course, want to make their points,‚ÄĚ says Michael Manley, vice president-sales strategy and dealer relations. ‚ÄúFrom that sense, (the meeting) was certainly direct. But I think it was upbeat.‚ÄĚ
There are no product announcements during the 90-minute session here at the 2007 National Automobile Dealers Assn. convention. Instead, the agenda focuses on dealer-relationship issues.
Somedealers are effusive in their praise for President and CEO Tom LaSorda, who has been a lightning rod for criticism after the company failed to reconcile its production with last year‚Äôs sales rate. As a result, inventories swelled beyond manageable levels.
LaSorda earns high marks for candor from Gary Barbara of Gary Barbara‚Äôs #1 Autoland in Philadelphia. ‚ÄúHe really comes across,‚ÄĚ says Barbara, who also describes the meeting‚Äôs tenor as ‚Äúpositive.‚ÄĚ
But Mike Kinsch of Norwood Park Dodge in Chicago is not a member of the Tom LaSorda fan club.
‚ÄúAll we‚Äôve heard is lip service,‚ÄĚ Kinsch says of Chrysler‚Äôs stated aim of repairing relationships with its dealer network.
The auto maker needs to ‚Äúget back to a regular, grassroots, let‚Äôs-roll-up-our-sleeves and sell cars kind of thing,‚ÄĚ he suggests, adding new product launches are out of step with reality.
In particular, he points to the new Dodge Avenger midsize car, which arrives in dealerships en masse this spring as an ‚Äô08 model.
‚ÄúMy new-car market will be dead, on that car, in six months‚Äô time,‚ÄĚ Kinsch says. ‚ÄúStick a fork in it, it‚Äôs done. Forget invoice. Forget everything. We will lose a G-note a car because they were out in the market so quickly.
‚ÄúThey‚Äôre killing us,‚ÄĚ he claims. ‚ÄúThey‚Äôre depreciating so fast, it‚Äôs killing us.‚ÄĚ
Jim Arrigo, newly named head of the Chrysler dealer council, disagrees.
‚ÄúI don‚Äôt think it‚Äôs a big problem,‚ÄĚ Arrigo says. ‚ÄúIt‚Äôs all product (regardless of the model-year.)‚ÄĚ
Manley notes the Dodge Caliber launched last spring as an ‚Äô07 and its residual value ‚Äúcame out where we expected it to be.‚ÄĚ
Caliber was the product that garnered the most product questions, Manley adds. Dealers want more of them.
‚ÄúFrom our perspective, it‚Äôs a nice problem to have,‚ÄĚ Manley says. ‚ÄúFirst we have to try and improve the line rate that we‚Äôve got.‚ÄĚ
In keeping with a newly adopted policy to monitor dealer orders, Manley says executives meet weekly to ‚Äúmake sure they fill our dealers‚Äô orders in a timely fashion.‚ÄĚ
Dealer profitability is the biggest issue facing Chrysler retailers, Arrigo maintains.
‚ÄúIt goes without saying that when things are good and everybody‚Äôs making a lot of money everybody‚Äôs very happy,‚ÄĚ Arrigo says. ‚ÄúWhen things aren‚Äôt good, things are little bit crazy. Tom LaSorda made it very plain that he‚Äôs here to make a change.‚ÄĚ
LaSorda tells reporters in an earlier roundtable discussion that Chrysler dealers are far off the goals the auto maker has set for their profitability.
‚ÄúIt‚Äôs encouraging that (Chrysler knows) they‚Äôre a long way away,‚ÄĚ Arrigo adds. ‚ÄúIf they say we‚Äôre close, then you know somebody‚Äôs not telling the truth. It‚Äôs going to take time. Any kind of change is going to take time.‚ÄĚ
Meanwhile, the specter of last year‚Äôs shadow inventory continues to haunt Chrysler. Referring to Chrysler‚Äôs inventory of unsold vehicles ‚Äď a stockpile that only came to light after Ward‚Äôs found discrepancies between the auto maker‚Äôs monthly sales, inventory and production totals ‚Äď one Midwest dealer wonders if the ‚Äúsales bank‚ÄĚ will ever go away.
To start the year, however, the sales bank was less than 10% of its mid-2006 level of 100,000 units.
Says Kinsch: ‚ÄúThe product is fine. It‚Äôs dealer relationship stuff. We need to attack that.‚ÄĚ