GM to Dump 42% of Dealers, Chrysler 25%

Chrysler and GM are dumping dealers. This is not news. The way it is happening is. Please consider Chrysler to dump 25% of dealers; 4 in South Florida.

Tamiami Chrysler Jeep Dodge in Miami is one of the largest volume dealers in the Southeast and one of the biggest Hispanic-owned Chrysler dealers in the nation, its owners claim.

Yet those distinctions weren't enough to keep the store at 8250 SW Eighth St. from being listed among the 789 dealerships that Chrysler plans to shed by June 9. The carmaker on Thursday asked a New York bankruptcy court for approval to trim about a quarter of its 3,200 stores.

"I was surprised, concerned and upset, in that order," said Carlos Planas, Tamiami Chrysler Jeep Dodge's president and CEO, on learning of Chrysler's decision. ``I didn't think that was something they would do after 20 years of being the largest volume dealer in Dade, third in the state and top 100 nationwide."

"The industry itself doesn't have the [sales] volume to support the dealers that exist now," said Chrysler spokeswoman Kathy Graham.

General Motors is expected to follow suit soon, slashing about 2,600 stores -- 42 percent of its dealers.

Richard A. Baker, president of the South Florida Auto Dealers Association, questioned why Chrysler wants to eliminate 25 percent of its dealers, which he called Chrysler's "customers."

"We want the marketplace to determine how many dealers is the right fit," Baker said. "We would have gotten the right fit of dealers over time."

Baker is correct. Moreover, Chrysler and GM have so badly managed their own companies, they cannot possibly know how to manage anything else. If dealers are not profitable, they will eventually go out of business, and in this environment, sooner rather than later.

Meanwhile, rejected dealers face another big headache. Chrysler informed them it will not buy back their new-vehicle inventory, parts or tools. Chrysler said it will assist dealers with the "redistribution" of vehicles to other dealers remaining in the network.

Mike Jackson, chairman and chief executive of Fort Lauderdale's AutoNation which is the parent company of Maroone, said he wasn't happy about that development.

"It's going to be a difficult challenge to redistribute those vehicles," said Jackson, heads the nation's largest car seller. "A significant percentage of that inventory is aged or not what's selling at the moment." Those dealers remaining in business will be reluctant take those vehicles, he added.

"Difficult challenge" is putting things mildly. "Impossible task" is more like it.

GM and Chrysler have not gotten anything right for a decade. For that matter, neither has Fiat. Please consider the following hilarious video....



How the hell can Fiat, Chrysler, or GM possibly know how many dealerships is the right number? They can't and it should be up to the markets to sort it out.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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