Chrysler Group dealers fume about subsidiary cuts

Chrysler Group dealers are fuming about the list of six cuts to their subsidies that DaimlerChrysler AG will implement as it attempts to stem the flow of red ink on its balance sheet. The automaker, on the other hand, is asking its retailers to remember what manufacturer has been their best friend during the industry's recent boom.

Dealers are upset about the elimination of approximately $125 per-vehicle marketing fees, floor plan assistance on vehicles in transit or for the first 15 days in dealer inventory and the fuel allowance for topping of a tank before delivery to a customer.

The retailers also take issue with DaimlerChrysler reducing the dealer discount on vehicle options as accessories by 3 percentage points and cutting the reimbursement for new-vehicle preparation.

“I might was well sell out and take the money to the bank," says one dealer. "There’s a reason why the meeting is packed with dealers. They just want to take, take, take. The National Dealer Council and everyone else is totally opposed.”

Another dealer says, "It’s not very favorable to the dealers. I’m really very upset. It’s a difficult business as it is. No one gave me a bonus when times were good. Taking away the gas allowance…I’m very upset.”

Marc Treiber of Rallye Chrysler-Dodge-Jeep in Monroe, NY, figures the cuts will cost dealers between $400 and $500 per car. “This after they railroaded us into funding the NASCAR program,” he stews. "In terms of margins, we’re running from the bottom up, not from the top down.”

John MacDonald, senior vice president of sales and field services, says the custs come to about $200 per car.

Bruce Bendell, of the Fidelity Holdings dealer group based in Long Island, NY, said he felt better after the meeting. “It’s an incentive for dealers to do better," he says. "But it’s hard for dealers when they’ve had tough times. And it’s going to be harder.”

After the meeting, Chrysler Group executives tried to put a positive spin on events.

“We expected a negative meeting and it wasn’t," says Bud Liebler, senior vice president of global brand marketing. "They wanted to know things like how did we get into this situation and how did it happen so fast? There were questions and it was tough.

Mr. Liebler says DaimlerChrysler assured the dealers the company's current problems weren't their fault. "They have always been here for this company.”

Mr. MacDonald says, “We told them that they didn’t cause this, we did. But we reminded them that we haven’t done what other manufacturers have done like try to own dealerships or go around them on the Internet. We have supported them for a while and now the screws have turned. It’s time for them to support us with strong sales.”