CHRYSLER GROUP DEALERS FUME OVER SUBSIDY CUTS

Chrysler Group dealers are fuming about six cuts to their subsidies that Daimler-Chrysler AG will implement as it attempts to stem the flow of red ink.

The automaker, on the other hand, is asking its retailers to remember what manufacturer has been dealer friendly 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 off 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 as well sell out and take the money to the bank,” says one dealer. “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 cuts come to about $200 per car.

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

Mr. MacDonald says, “We haven't done what other manufacturers have done like try to own dealerships or go around dealers on the Internet. We have supported them for a while and now the screws have turned.