Tag Archive | "Chrysler Group"

After Getting the Boot, Car Dealers Regroup

CLARKSTON, Mich. — For two decades, Chuck Fortinberry made a decent living selling Chryslers and Jeeps in this town 40 miles north of Detroit.

Then last year, as part of Chrysler Group LLC’s bankruptcy reorganization, Chrysler sent a letter informing him that his Clarkston Chrysler Jeep dealership was among 789 dealers the automaker was dropping.

Since then, Fortinberry has been on a journey to salvage something from his business and map out a new future. About 10 miles from his darkened dealership, Fortinberry has opened Ironton Rustic Furniture and Accessories, offering everything from tables and chairs to beds and couches, reported The Wall Street Journal.

“Selling Chryslers wasn’t just my job, this is what I was,” the 54-year-old Fortinberry said. “I was the Chrysler-Jeep dealer in Clarkston. I was the guy you went to when you needed jerseys for your baseball team. There was a lot I had to get through but I knew I had to move on.”

Across the country, hundreds of car dealers are facing the same challenge while struggling with the taxes and other costs of maintaining a large piece of commercial property. Selling the land isn’t an option for many of them, given the poor real-estate market

Last year, 1,603 dealerships closed their doors, most as a result of the Chrysler and General Motors Co. bankruptcies, according to Urban Science, a Detroit-based consulting firm. An additional 309 dealerships went dark in the first eight months of this year.

The closures leave about 18,170 dealerships in the U.S. employing 912,200 workers. More closings are now on tap after Ford Motor Co. last week said it wants to cut 175 of its Lincoln dealers within the next two years.

A dealership’s closure can have a big economic impact in a small town. The average dealership last year employed 49 people and had an annual payroll of $2.4 million, according to the National Automobile Dealers Association. The payroll for all U.S. dealerships last year was $43.5 billion, and represented almost 13 percent of the nation’s total retail-trade payroll, the association said.

Although there are no national studies, auto makers say many of the affected dealers who were already selling other brands have simply carried on by focusing on those remaining makes or by selling used cars.

Chrysler said as many as 85 percent of the 789 dealers it dropped are now selling other car brands. GM offered no estimate of how many of its 1,549 dealers set to lose their GM franchises Nov. 1 might stay in business by selling other brands.

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Chrysler Names Ally as Preferred Lender for Fiat Buyers

DETROIT – Ally Financial will be the preferred consumer lender for Fiat vehicles sold in the United States, Chrysler Group confirmed today in a press release.

Chrysler had already told dealers that Ally, formerly known as GMAC, will offer floorplan packages for Fiat dealers, along with real estate and working capital loans.

Ally is also the preferred wholesale and retail lender for Chrysler Group’s brands, Chrysler, Dodge, Jeep and Ram.

After an absence of about a quarter century, Fiat is returning to the U.S. market with the 500 subcompact. The car will start arriving in dealerships in December, and the advertising and market launch is scheduled for March.

Chrysler is now combing through proposals from dealers who applied for Fiat franchises and is expected to announce its Fiat network in mid-October. Chrysler has said it will name 165 Fiat dealers. Those dealers will sign a separate franchise agreement and eventually will need separate Fiat facilities, including showroom space and service bays.

“This relationship will help dealers fund their new stores and inventory, while giving Fiat customers the opportunity to obtain retail financing through a trusted company,” said Fred Diaz, lead executive for U.S. sales of all Chrysler Group brands, in a prepared statement.

Tim Russi, executive vice president of North American Operations for Ally Financial, also issued a statement: “Ally Financial is accepting applications for wholesale credit lines from dealers who are awarded a Fiat brand franchise. At Ally, we know our primary role is to help dealers buy and sell more vehicles.”

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Chrysler: Dealers Want Fiat

Chrysler Group LLC says response from dealers seeking a franchise to sell vehicles from partner Fiat S.p.A. has exceeded its expectations.

Wednesday was the deadline to submit a proposal for a Fiat dealership. A final number was unavailable at the end of the business day because some proposals were still arriving.

Sergio Marchionne, CEO of Chrysler and Fiat, wants Fiat representation in 165 locations in the United States.

About 500 Chrysler dealers met in Detroit Aug. 30 to learn the requirements to become a Fiat dealer and gain an overview of the product and business plans through 2014, The Detroit News reported.

Bill Golling of Golling Chrysler Jeep Dodge Ram in Bloomfield Hills, Mich., is among those who are interested in selling Fiats.

He made sure his proposal, including conceptual drawings, met the deadline.

Golling said he left the August meeting with the impression that two dealers will be chosen for Metro Detroit, and he wants to be one of them.

He has a used car area, with a showroom and service area, that can be converted to a Fiat showroom in the short term, but recognizes the wisdom of a stand-alone facility in the future.

Production of the tiny Fiat 500 hatchback for North America begins in December in Mexico.

Future vehicles include convertible, sporty and electric versions of the Fiat 500. The Alfa Romeo brand will return to the United States with a mid-size car and crossover in 2012, followed by a larger SUV and luxury sedan, as well as some smaller cars.

“It’s exciting starting all over fresh,” Golling said.

Chrysler will begin evaluating the dealership proposals immediately.

“Now that we have the dealer proposals in hand, we move right into the process of reviewing them and then naming our Fiat dealers in a few weeks,” said Chrysler spokesman Ralph Kisiel.

Chrysler wants dealers to have a fully operational separate showroom in place with trained staff by February, before the marketing campaign gets under way in March, Kisiel said.

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Chrysler Could Add Value to Fiat, Analysts Say

TURIN – Chrysler Group’s fortunes will be crucial in creating value for shareholders of the new automotive-focused Fiat S.p.A.

Chrysler could add between 2.75 euros and 5.40 euros (about $3.70 to $7.20) per share to Fiat’s basic value, according to financial analysts polled by Automotive News Europe.

Fiat’s 20 percent stake in Chrysler, currently with a zero book value, is the biggest positive element seen by analysts for the new Fiat S.p.A, which will comprise the Fiat, Alfa Romeo, Lancia, Ferrari and Maserati car brands when it starts trading on Jan. 3. Fiat’s truck and tractor units will be spun off on the same day into a new unit called Fiat Industrial S.p.A.

Analysts expect Fiat’s shares to be worth about 6.10 euros per share while Fiat Industrial shares will trade at 8.20 euros.

Fiat’s automotive business represents 63 percent of the group’s expected 2010 total revenues, but analysts give a higher value to the industrial unit’s shares because the auto business will have bigger investments to fund and will have lower profit margins.

Fiat shares have traded slightly above 10 euros in recent weeks.

Here are analysts’ views:

  • Morgan Stanley’s Stuart Pearson said Fiat’s stake in Chrysler and increasing synergies and business between the two automakers could add another 5.40 euros per share to 7.30 euros value he currently envisages for the new Fiat S.p.A.
  • Max Warburton at Bernstein Research factors in the value of the Chrysler stake at 2.75 euros per share — more than half of the 5.20 euros he predicts for the new Fiat.
  • Banca IMI’s Monica Bosio factors in 4.50 euros per share related to Chrysler – that is 3.30 euros for the value of Fiat’s stake and 1.20 euros in potential synergies – in her 7.40 euro price target for the new Fiat.

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Marchionne, Products Wow Chrysler Dealers

For 16 months, Chrysler Group dealers waited for face time with CEO Sergio Marchionne. When it finally happened last week, many said Marchionne — quoting Dickens and Einstein and calling passionately for a Chrysler rebirth — gave them confidence in their company and its leader.

Speaking to dealers as “chief executive to chief executive, because that is what you are,” he called for a healing process within the company and said Chrysler must regenerate its tarnished greatness and reconnect to “the heart of the market.”

Marchionne, who took control of Chrysler in mid-2009, spoke to a crowd of about 4,000, made up of dealers and their associates, at Chrysler’s National Dealer Announcement Show in Orlando.

Reaction was enthusiastic — in part because Marchionne and his brand bosses unveiled some tantalizing new products, such as a mid-sized sedan called the Chrysler 200, a reborn Dodge Viper and a possible Jeep pickup.

In a speech that was by turns solemn, philosophical and hilarious, he called on dealers to rally behind his team and the 17 vehicles Chrysler showed them.

He said Chrysler is financially healthy and is on track to post a $5 billion operating profit on sales of 2.8 million units by 2014. Last year, Chrysler sold 1.3 million units worldwide.

He acknowledged that many had waited a long time to hear news from the company. The last dealer announcement show, for example, was in Las Vegas in 2007, when Chrysler was owned by Cerberus Capital Management.

“We have traveled a long road since Las Vegas. A lot of that road was uncertain, uneven, unpleasant and left all of us with a deeply felt sense of discomfort. It left no clear direction as to the future,” Marchionne said.

He called for a healing process with dealers, many of whom had been bruised by the financial crisis of 2009 and the company’s rejection of 789 of their colleagues via bankruptcy.

“We know that the healing process goes beyond the relationship between Chrysler and its dealer body. What is ultimately needed is a reconnection to the heart of the market, of the brands to their customers,” he said.

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Marchionne Targets Chrysler IPO in Second Half of 2011

TURIN, Italy – Fiat and Chrysler CEO Sergio Marchionne said the Italian automaker could increase its stake in the U.S. automaker from the current 20 percent to 35 percent by the end of next year and that Chrysler plans to launch its public stock offering by the end of 2011, reported Automotive News.

Earlier this week, he said the IPO would take place in 2011, but wasn’t more specific.

“I don’t think it’s the first part; I think it’s a second-part-of-the-year event,” Marchionne told reporters when asked when in 2011 a Chrysler share sale would take place.

Talking to reporters on the sidelines of the Fiat shareholders’ meeting that approved the spinoff of the Iveco heavy truck and Case New Holland farm and construction equipment units from Fiat Auto, Marchionne said Fiat could get an additional 5 percent of Chrysler by year end.

“With the start of production of the Fiat 500 in December, we are fulfilling the first of our three obligations to grow our stake to 35 percent,” he said.

Marchionne added that he is not particularly worried about when Fiat receives its three additional installments of Chrysler equaling 5 percent each.

“What is important to me is to reach the goals we are set [on] reaching; share transferring is just a consequence of the fulfilling of our obligations with the U.S. and Canadian governments,” he said.

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