Special Coverage

NADA Convention & Exposition

LAS VEGAS – Chrysler Group confesses its sins – again – but all still is not forgiven, as evidenced by an “upbeat” meeting where top executives faced some tough questions.

“They did, of course, want to make their points,” says Michael Manley, vice president-sales strategy and dealer relations. “From that sense, (the meeting) was certainly direct. But I think it was upbeat.”

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.

Some Chrysler dealers 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’s sales rate. As a result, inventories swelled beyond manageable levels.

LaSorda earns high marks for candor from Gary Barbara of Gary Barbara’s #1 Autoland in Philadelphia. “He really comes across,” says Barbara, who also describes the meeting’s tenor as “positive.”

But Mike Kinsch of Norwood Park Dodge in Chicago is not a member of the Tom LaSorda fan club.

“All we’ve heard is lip service,” Kinsch says of Chrysler’s stated aim of repairing relationships with its dealer network.

The auto maker needs to “get back to a regular, grassroots, let’s-roll-up-our-sleeves and sell cars kind of thing,” 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 ’08 model.

“My new-car market will be dead, on that car, in six months’ time,” Kinsch says. “Stick a fork in it, it’s done. Forget invoice. Forget everything. We will lose a G-note a car because they were out in the market so quickly.

“They’re killing us,” he claims. “They’re depreciating so fast, it’s killing us.”

Jim Arrigo, newly named head of the Chrysler dealer council, disagrees.

“I don’t think it’s a big problem,” Arrigo says. “It’s all product (regardless of the model-year.)”

Manley notes the Dodge Caliber launched last spring as an ’07 and its residual value “came out where we expected it to be.”

Caliber was the product that garnered the most product questions, Manley adds. Dealers want more of them.

“From our perspective, it’s a nice problem to have,” Manley says. “First we have to try and improve the line rate that we’ve got.”

In keeping with a newly adopted policy to monitor dealer orders, Manley says executives meet weekly to “make sure they fill our dealers’ orders in a timely fashion.”

Dealer profitability is the biggest issue facing Chrysler retailers, Arrigo maintains.

“It goes without saying that when things are good and everybody’s making a lot of money everybody’s very happy,” Arrigo says. “When things aren’t good, things are little bit crazy. Tom LaSorda made it very plain that he’s here to make a change.”

LaSorda tells reporters in an earlier roundtable discussion that Chrysler dealers are far off the goals the auto maker has set for their profitability.

“It’s encouraging that (Chrysler knows) they’re a long way away,” Arrigo adds. “If they say we’re close, then you know somebody’s not telling the truth. It’s going to take time. Any kind of change is going to take time.”

Meanwhile, the specter of last year’s shadow inventory continues to haunt Chrysler. Referring to Chrysler’s inventory of unsold vehicles – a stockpile that only came to light after Ward’s found discrepancies between the auto maker’s monthly sales, inventory and production totals – one Midwest dealer wonders if the “sales bank” 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: “The product is fine. It’s dealer relationship stuff. We need to attack that.”