Chrysler bailout & bankrupcy moves engine plant to Mexico

[Headless Thompson Gunner]

I stopped at a Chrysler/Jeep dealer this very afternoon, to buy a part for my trusty old Jeep. The guys in the parts department were looking rather woebegone. When I asked why, they said they don't know IF their dealership will stay in business. This happens to be one of the larger, and most successful, Chrysler/Jeep dealers in the state. Seems the .gov told Chrysler to cut costs any way they could, and one of the ways they are taking is to force some dealerships to close.

This makes zero sense to me, since the dealerships don't belong to Chrysler, but apparently some of the appurtenances (exterior signage, specialty tools and equipment, etc) does belong to Chrysler rather than to the dealers, so Chrysler may just pull the rug out from under many of the smaller dealerships.

Great way to restore the economy, ain't it? Force otherwise viable, locally-owned, people-employing companies out of business so the parent corporation can have its signs back.

Thank you, President Obama, for rescuing us.

My Uncle owns a Chrysler Jeep Dodge dealership.  He's also worried that they're going to take away his business.  No idea why.  The dealerships don't cost Chrysler anything.  The dealerships are self-supporting.  And the dealerships are the only real customers Chrysler has.

But I suppose stupidity is a forgone conclusion.  The goverment has never been able to run any enterprise well, save perhaps the military.

[roo_ster]

.mil runs as well as it does despite all the gooberment baggage due to the (sometimes herculean) efforts of 20% of the personnel to break/bent/mutilate the regs to get the boys on the pointy end of the spear what they need to do their job.

[Sawdust]

Chrysler closing 789 dealerships
Troubled automaker tells court it wants to shutter about a quarter of its dealers.

http://money.cnn.com/2009/05/14/autos/chrysler_dealer_closings/index.htm?postversion=2009051410

Sawdust

[Hawkmoon]

In assessing Chrysler's viability, the Treasury Department found the automaker could not survive as a stand-alone company. Chrysler had already been in discussions with Fiat about a partnership. The current plan calls for Fiat to assist Chrysler by providing engineering for small and midsized cars.

This is all such monumental BS it makes me want to puke.

The two reasons Chrysler acquired American Motors in 1987/1988 were:

1) The Jeep brand

2) AMC's expertise in engineering small and mid-size cars -- specifically (at that time) the Eagle line of vehicles.

So now they need small vehicle engineering input from Fiat, whose small cars have never lasted more than about two years on American roads under American drivers? Gimme a break.

[Marvin Dao]

My Uncle owns a Chrysler Jeep Dodge dealership.  He's also worried that they're going to take away his business.  No idea why.  The dealerships don't cost Chrysler anything.  The dealerships are self-supporting.  And the dealerships are the only real customers Chrysler has.

But I suppose stupidity is a forgone conclusion.  The goverment has never been able to run any enterprise well, save perhaps the military.

GM and Chrysler's business case for closing dealerships is reasonably sound compared to their other schemes.

Both figure that they've saturated the market with dealerships to the point where there's significant intra-brand competition between dealerships. That leads to lower average selling prices as consumers cross shop between intra-brand dealerships for the best deal. By cutting out significant chunks of their dealership network, they figure they can reduce intra-brand cross shopping and increase average selling prices.

In turn, that should allow them to squeeze the remaining dealerships more and extract additional revenue per vehicle sold.

So now they need small vehicle engineering input from Fiat, whose small cars have never lasted more than about two years on American roads under American drivers? Gimme a break.

Yep. Chrysler couldn't get things done with Mercedes' engineering support. Still wondering about how anyone thinks they'll do better with Fiat's.

[Waitone]

Chrysler's shotgun marriage to Fiat has nothing to do with engineering small cars.  It has everything to do with giving European labor unions a toe-hold in the US.  Just another step in globalization.

[Scout26]

GM and Chrysler's business case for closing dealerships is reasonably sound compared to their other schemes.

Both figure that they've saturated the market with dealerships to the point where there's significant intra-brand competition between dealerships. That leads to lower average selling prices as consumers cross shop between intra-brand dealerships for the best deal. By cutting out significant chunks of their dealership network, they figure they can reduce intra-brand cross shopping and increase average selling prices.

In turn, that should allow them to squeeze the remaining dealerships more and extract additional revenue per vehicle sold.

Yep. Chrysler couldn't get things done with Mercedes' engineering support. Still wondering about how anyone thinks they'll do better with Fiat's.

Hmmm, so because the dealerships undercut each other, Chrysler wasn't able to turn a profit by selling more cars cheaply ??  Is that what you're saying ??   And that the way to improve profitablity is to sell fewer at a higher price ??  So the bottom line sales strategy is to raise the price of the product people were NOT buying in the first place ??

That's a winner, if I ever heard one.

 

[Regolith]

Hmmm, so because the dealerships undercut each other, Chrysler wasn't able to turn a profit by selling more cars cheaply ??  Is that what you're saying ??   And that the way to improve profitablity is to sell fewer at a higher price ??  So the bottom line sales strategy is to raise the price of the product people were NOT buying in the first place ??

That's a winner, if I ever heard one.

 

Don't forget eroding quality by bringing in Fiat.  That way they get the trifecta of fail.

Typical government-run business. 

[drewtam]

The reason the military runs so well is that its job is to destroy things, not produce. When something needs to be produced they contract it out to private companies.



[This is not a knock on the military, but an observation about its reason d'etre.]

[roo_ster]

The reason the military runs so well is that its job is to destroy things, not produce. When something needs to be produced they contract it out to private companies.

Hmm, good point.