Quote:
Originally Posted by 427sharpe
It seems that FIRST on the hitlist would be those not making the corporation money, yes? And in saturated markets, wouldn't explanations be required about how to decide a profitable business closure decision is made? By volume? By financial strength? As the government now owns a significant share of Chrysler, and has appointed board members, is it too far fetched to assume that politics may be coloring the decision making?  |
You can bet Chrysler knew it might have to defend its decision and its "cut list" in court at some later point, and the cut list was far more "sterilized." Each franchisee/dealer is assigned a "planning volume" which represents the total number of new vehicles he/she is allocated and mandated to buy from the manufacturer and sell yearly. That number can grow if a dealership can sell more, but it is expected to not shrink much at all, if ever. After all, the idea is maintaining market share against the competition. A dealer must also move a certain dollar amount of parts, and meet stringent requirements around warranty repairs. Lastly, a dealership must make an investment in advertising and growth. All of this results in least and most-favored dealer status. What most people don't know is that at ALL times these manufacturers stack rank their dealers from most to least important, based on a lot of this criteria. So when Chrysler decided it needed to cut, the cut line was already known and in place in a spreadsheet somewhere. We are hearing all the whining about profitable dealers being cut. Just because a dealership is profitable doesn't mean its penetrating the market with enough cars. But what you'll never hear is how many of those terminated dealers were in real financial trouble, in hock to Chrysler in the millions, out of trust on their floorplan financing, and undercapitalized and unable to meet the requirements in the franchise agreements. This needed to happen and is all part of market realignment, politics driven/involved or not.