Chrysler dealers hopeful for new models but uncertain about current ones

By Tom Krisher
Monday, February 15, 2010

ORLANDO -- As he walked out of an auditorium Sunday afternoon, Grant Irwin Sr. pretty much summed up the feelings of the Chrysler dealers who had just spent two hours listening to the automaker's new management.

The 73-year-old dealer from northwest Oklahoma said that he's impressed by the executives installed by Fiat and Chrysler chief executive Sergio Marchionne, and optimistic about forthcoming cars and trucks.

But he's also wondering about the short term, which he and other dealers must survive with an aging model lineup that pushed sales down 36 percent last year.

"We're struggling," said Irwin, who runs a Chrysler-Dodge-Jeep dealership in rural Woodwind, Okla., about 140 miles from Oklahoma City. "We're going to sell less cars."

Dealer after dealer who exited the annual meeting at the National Automobile Dealers Association convention here said that they were happy with what they heard, but also that executives did not give options to help dealers get through the time it takes for new models to arrive, which could be six months to a year.

Chrysler sold only 931,000 cars and trucks last year, down from 1.4 million in 2008. Sales last month were even worse, only 62,000, down 55 percent from January 2009.

"I think there's a lot of good things coming," said Paul Walser, who runs a Chrysler-Dodge-Jeep dealership in Hopkins, Minn., near Minneapolis. "I think we're all wondering what the journey looks like between now and the time when all the product starts to arrive." Chrysler plans to have 16 new or significantly redone models by the end of this year. The company has high hopes for a new, lighter and more efficient Jeep Grand Cherokee that is coming around June. A redone Chrysler 300 and Dodge Charger, along with a new Fiat 500 minicar and a new Dodge sport-utility vehicle, are expected later in the year.

The dealers heard presentations on advertising, marketing and incentives from Fred Diaz Jr., who runs the Ram truck brand and is Chrysler's top U.S sales executive, and Olivier Francois, who heads advertising and the Chrysler brand.

They told the dealers that they are projecting sales this year at just under 1.2 million vehicles, up from last year. The company, the executives said, still has $5 billion in cash and has reduced its expenses and gained efficiencies so it can break even at just over 1 million vehicles in annual sales.

Many dealers said they will have to adjust the same way, keeping overhead costs low and making money on used cars and service, if they want to survive. Others are hoping for better incentives so they can sell more vehicles by offering great deals.

"Some dealers, I think, were pretty encouraged, and others are frustrated," Walser said. "We're kind of playing defense, I think, for the moment." Dealers who only sell Chrysler brands were a little more frustrated because they depend solely on the automaker, said Walser, who also runs a Toyota dealership and other franchises.

Some dealers said they were skeptical of recent advertising campaigns, which were humorous and focused more on brand identity rather than touting Chrysler's products. Some wondered how the brand advertising would help them sell more cars.

Chuck Eddy Jr., a Chrysler-Dodge-Jeep dealer in Youngstown, Ohio, said he had good sales last year because of marketing deals, helped by incentives from the company such as rebates and low-interest financing. He's hoping for increased incentives to help make it until the new vehicles arrive.

"Our buyers are loyal because they like the deal," Eddy said. "We've got to get to the new product so we don't have to worry so much about selling the deal."

Dealers said they have been forced to become survivors by holding franchises from a company that has been through turmoil. Chrysler was bought by Germany's Daimler in 1998, a marriage that unraveled in 2007 with the sale to New York private-equity firm Cerberus Capital Management. Cerberus gave up on the company last year as it headed into Chapter 11 bankruptcy protection. Propped up by aid from the U.S. government, Chrysler came out of bankruptcy under control of Fiat. Dealers said the company is paying for the Cerberus years, when little was invested into new products.

-- Associated Press

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