Tag Archive | "Chrysler Group"

Chrysler Signals it Won't Follow GM on Dealer Reinstatement

WASHINGTON – Chrysler Group, reacting to General Motors Co.’s plans to reinstate 661 rejected dealerships, is signaling that it will not follow suit while noting that the number of arbitration claims involving its former dealers has fallen 5 percent.

“Dealer appointments will be a function of the arbitrations,” Chrysler said in an e-mail yesterday to Automotive News. “The company looks forward to the expeditious completion of the arbitration process.”

As of late January, 418 of the 789 shuttered Chrysler dealerships had paid $1,625 apiece to give notice of their intent to arbitrate, the company said. That number has fallen to below 400 after some dealerships changed their minds, Chrysler said.

On Friday, GM said it plans to reinstate 661 of the 1,160 dealerships that had filed arbitration claims. A total of 2,000 were targeted to lose one or more franchises by October.

Asked whether reinstatements would be possible at Chrysler, a source close to the company said GM’s rejected dealers are still in business — meaning they have contracts to sell cars — while Chrysler’s are not.

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Lawmakers Ask Chrysler to Halt New Franchises in Rejected-store Markets

WASHINGTON – Two Republican lawmakers have asked Chrysler Group to stop awarding franchises in the markets of rejected dealerships that have filed for arbitration, Automotive News reported.

“We are concerned about your treatment of the loyal Chrysler dealerships that have stood by your brand for decades,” Reps. Pete Hoekstra of Michigan and Steven LaTourette of Ohio said in a letter to Chrysler CEO Sergio Marchionne.

The letter, dated yesterday, says a shuttered dealerships could win reinstatement from an arbitrator, yet be prevented from reopening because a new franchise already had been awarded in that market.

“Dealerships deserve a good-faith effort entering the arbitration process,” the letter says.

Chrysler did not immediately respond to a request for comment.

In recent weeks, a number of rejected dealers have complained about Chrysler’s new franchise awards.

In unsuccessful settlement talks last fall, Chrysler told dealer groups that it planned to award about 100 new franchises in the United States. The company has declined to confirm or update this figure.

Dealer groups have unsuccessfully requested that rejected dealerships be given the right of first refusal for any franchise awarded in their former markets.

“Chrysler has blatantly circumvented this process as a sick sport,” said Tammy Darvish, co-leader of the Committee to Restore Dealer Rights, a group of rejected dealerships. “This behavior of Chrysler is an embarrassment to business ethics in America.”

Hoekstra, who is running for governor in Michigan, sent a similar letter to General Motors Co. last month.

But Darvish said her group has gotten many more complaints from rejected dealerships about Chrysler’s awards than about GM’s.

More than 400 of the 789 closed Chrysler dealerships have paid $1,625 apiece to file notice of their intent to seek arbitration. Arbitrators are now being assigned to different cases. The arbitration process must be completed by mid-June unless extended for a month by arbitrators.

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Chrysler Rolls Out New Dealer Standards

AUBURN HILLS, Mich. — As of February, Chrysler Group has completed rolling out new standards for dealers.

A person close to the situation told Auto Remarketing that large dealers selling up to 1,800 units could earn up to $200,000 from the automaker by giving customers superior customer service.

Basically, the automaker began rolling out standards to its dealers in October of last year. These consist of Customer Care standards, which include dealership, sales, after sales and service.

Furthermore, Management Standards include the facility, training, sales, after sales, employees and capital.

The standards are designed to ensure that customers are getting a “superior customer experience every time a customer visits a Chrysler, Jeep, Dodge and Ram dealership,” noted the person familiar with the program.

Meanwhile, a Chrysler Group spokesperson indicated to Auto Remarketing, “The rollout started with the customer care standards in October and was completed in February this year. As a part of the standards, third-party firms will evaluate the dealerships on a number of criteria to provide an accurate picture of how dealers are meeting or exceeding the standards,”

“There are rewards for dealers who treat customer well, but beyond that the company hasn’t disclosed any information,” she added.

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Lithia Gets Boost from Used-car Sales, but Chrysler Business Suffers

DETROIT – Used-car sales helped Lithia Motors Inc. post improved earnings and revenue during the fourth quarter, Automotive News reported.

The dealership group said yesterday that it posted net income of $2.8 million, compared with a net loss of $1.5 million in the same period in 2008.

Lithia also said it generated fourth-quarter revenue of $419 million, up 4.9 percent from $399 million in the same period the year before.

Problems at Lithia’s biggest manufacturer partner, Chrysler Group, created severe sales challenges, according to the retailer’s report.

Chrysler brands accounted for 23.7 percent of Lithia’s new-vehicle unit sales during the quarter, down from 35.9 percent of vehicle sales during the fourth quarter of 2008.

“Our fourth-quarter results were impacted by weak new-vehicle sales at our Chrysler stores,” CEO Sid DeBoer said in a statement. “This was caused by the delay in the release of new products like the 2010 Ram heavy-duty pickup and lower advertising and incentive spending by Chrysler which slowed floor traffic.”

DeBoer also said Lithia responded by focusing on increasing used-vehicle sales at the affected locations.

“Excluding Chrysler, we had approximately 18.5 percent new-vehicle same-store sales growth over the fourth quarter of 2008,” he said in the statement. “On an adjusted basis, we were profitable in the fourth quarter despite significant headwinds.”

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Reinstatement May Pit Dealer Against Dealer

Arbitration will do more than put some rejected Chrysler Group and General Motors Co. dealerships back in business. In some cases it stands to pit two dealers against each other with claims on the same territory, Automotive News reported.

That’s because after bankruptcy the automakers appointed some new dealers to fill in empty markets.

If existing and reinstated dealers occupy the same territory, Chrysler said it expects “protests to be brought against the reinstated dealers” under state franchise laws that protect dealer rights.

Chrysler declined to say how many new dealerships it has appointed since bankruptcy. In some cases, it issued only letters of intent to provide franchises. The company told dealers last fall that it planned to open about 100 new points.

Of Chrysler’s 789 rejected dealerships, 409 filed for arbitration.

The arbitration hearings are expected to start in early March. Under the law signed by President Obama in January, arbitration for rejected Chrysler and General Motors dealerships must be completed by mid-June, though arbitrators have the discretion to extend the process for a month.

The American Arbitration Association, which oversees the process, now is assigning arbitrators for the 1,573 cases.

In some cases, rejected and pro-spective new dealers are already talking to each other to reach a solution.

GM chose to wind down about 1,350 dealerships through October 2010. It has appointed new dealerships “on a very limited basis,” GM spokeswoman Ryndee Carney said. In “select cases,” particularly if a dealer is only losing one franchise from a multibrand store, GM has appointed a new dealer in a market in which a wind-down dealer is still open, Carney said. She declined to give specific numbers.

Arbitrators can decide only whether to reinstate dealerships, but the automakers can move to settle cases with cash outside of arbitration.

Chrysler acknowledged that arbitration will pose a financial burden but expressed confidence in its ability to defend against the claims. The company declined to say whether it intended to settle or drop any cases.

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Marchionne Says Fixing Fiat Was Bigger Challenge than Chrysler

Chrysler Group LLC Chief Executive Officer Sergio Marchionne said he is more optimistic about the company’s recovery than he was about rebuilding Fiat SpA when he joined the Italian automaker in 2004, reported Bloomberg.com.

Chrysler beat its target for $5 billion in year-end cash, Marchionne said, giving a range between that figure and $6 billion while declining to be more specific. U.S. sales fell 36 percent in 2009, the most of any major automaker.

Marchionne, 57, cited the risk of the collapse of Turin, Italy-based Fiat almost six years ago as making that automaker’s turnaround more difficult. He became CEO of Auburn Hills, Michigan-based Chrysler in June when Fiat took a 20 percent stake as the U.S. company left a government-backed bankruptcy.

“Fiat is much larger than Chrysler,” Marchionne said. “I didn’t have the U.S. Treasury there to cut me a check and keep me in business.”

Marchionne has promised to repay government borrowing by 2014, three years ahead of schedule, while more than doubling global sales and integrating Fiat and Chrysler products, Bloomberg.com reported.

Fiat, Italy’s largest automaker, faced the prospect of failure when Marchionne took over in 2004 as the company headed for a fourth straight annual loss. He negotiated a $2 billion settlement with the former General Motors Corp. to end its obligation to buy Fiat and completed a debt-for-equity swap.

Shares of Fiat have gained 78 percent since June 1, 2004, when Marchionne was named CEO.

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