Standing Ovation for Chrysler Despite a Tough Message to Dealers

Chrysler LLC Vice Chairman Jim Press is asking dealers, many of whom already are overloaded with inventory, to order their scheduled vehicle allocation at the same time the auto maker is cutting their margins 0.5% and freezing warranty labor rates.

In most years, that would be a recipe for a contentious and heated meeting at the National Automobile Dealers Assn. convention here. But not this year, as Chrysler dealers respond with a standing ovation to the plea and the can-do message that accompanies it.

Press' message is a simple one. For the auto maker to make it through the next round of government negotiations for additional bridge-loan money, it has to get its plants going while maintaining inventory at end-of-2008 levels. For that to happen, retailers must start ordering vehicles.

“It was a Knute Rockne-like moment,” Wes Lutz, owner of Extreme Dodge Hyundai in Jackson, MI, says of Press' presentation. “He sold me. It was one of the best speeches I've ever heard from a Chrysler executive. He did a very good job of blatantly telling us what the situation is right now.”

Hayden Elder, Chrysler's National Dealer Council co-chair, calls the message, “no-holds barred. But it was one dealers needed to hear.”

Asked if dealers sought assurances Chrysler Financial would lessen stringent policies on paying down aged inventory if dealers take on more stock, Ohio dealer Chuck Eddy tells Ward's dealers still will have to meet their responsibilities to the captive finance firm.

“Chrysler Financial is being as supportive as it can be with the cards they have been dealt,” he says.

Dealers say Chrysler officials seem upbeat with the recently announced tentative deal for Fiat Auto Group to take 35% equity in Chrysler. But some are concerned the agreement could hurt its chances at obtaining more government loan money in March, as some in Congress have expressed concern over providing financial aid to the auto maker if it is even partially foreign-owned.

“I hope and pray the Fiat deal doesn't cloud the issues for the government,” Elder says. “We need to realize it will help manufacturing jobs in this country. Look, we'll be exporting vehicles overseas with this deal.”