Behind the Scenes @ Chrysler Dealers

[Irulan]

I'm curious, does your family own a dealership or do you work for one?

I'd like to see an analysis of the franchise contracts. These kinds of actions cannot be a total surprise.

I think that if a franchise owner is truly surprised by all of this they are living with their heads in the sand. They have been sellling a brand that has been on it's way down for years. How could they not be aware that the quality ratings on Chrylser are very low? That oil is going up, not down? That perceived climate issues are affecting the kinds of cars people buy?

Any business person with good sense would be looking 5-10-20 years down the line and perhaps think to themselves, "you know, I bet we can't sell Hummers and large SUVs forever. What are our options"? Or perhaps, "you know, this company is just not profitable". Or " you know, Chrysler vehicles are consistently in bottom rankings of Consumer Reports quality", maybe we should look at selling the dealership before it gets really bad.

I agree that lots of people losing their jobs is really unfortunate, incredibly unfortunate. But the market also needs correction. There are very few companies that can sell an inappropriate product and carry lots of debt on their own, and survive.

I'll put my flameproof undies on now.

[Biciclista]

Irulan, I agree with you. I've been driving a 1991 Honda for 10 years now because car manufacturers couldn't be bothered to produce a car with gas mileage as good as I'm getting unless they could charge a fortune for it (Like a Prius).
Why buy a new car if the old one runs well and gets better gas mileage? I've seen a slight movement towards producing more efficient cars in the last couple years...
Only in the USA do we say "the government ought to do something about this - about every little thing"
and then say "cut government spending!!" or "this is socialism" when we the people mention that health care for all would be good for our children.

you just can't have it both ways. Why didn't Chrysler come up with cute little low gas mileage vehicle? WHY on earth did they put so much advertising and funds into HUMMERS? is that not the most repulsive recreation vehicle ever made? I see people driving it to and from work every day, stopped on the freeway, belching carbon dioxide, monoxide and whatever else, with one little tiny person inside. Kind of makes me sick.

So, yes, I think it's sad that car dealers are getting the shaft from Manufacturers, but if it's illegal, there will be a class action law suit and the lawyers will win and the dealers will get some satisfaction.

[Irulan]

I bought a new car last year. What I really wanted was a cute, high mileage WAGON, not too spendy, nice trim level. Right. Remember the old Corrola and Civic wagons? I was really hoping for an updated version but I ended up having to "settle". I'll spare you all the detaills; I've listed them in other threads.

[flash]

Hiya! Great question. No, I don't work for or have any affiliation (family, business interest, etc.) with auto manufacturers or dealers.

My interest / concern here surrounds the decision & the way it is implemented. As I see it, IF the rushed & forced closures ARE illegal, then a class action suit and a court decision delivered years from now doesn't help anyone (dealers, communities, etc.).

Love the heated discussion ... this is going to be an interesting one

[PamNY]

"Chrysler is able under bankruptcy to cancel franchise agreements with its dealers" at least according to this primer in the New York Times.

A lot has been written about this; if you Google "Chrysler bankruptcy dealership contract" or similar you will find it. My amateur understanding is that bankruptcy changes things, and contracts or franchise agreements that Chrysler had with dealerships (or anyone else) can and probably will be altered by the bankruptcy court.

Pam

[Tri Girl]

Irulan- I'll have to put my fireproof undies on with you here. Biciclista- you have it dead on: you can't have it both ways. Govt. bail us out, but then that's socialism, but we can't survive without govt. intervention. Which is it?

I have absolutely NO sympathy for the large car manufacturers. They've done this to themselves with years of so-so cars and their refusal to make cares more efficient. This is the life cycle of business: you produce crappy products- you go out of business. Then they complain and want govt. money, but when the govt. makes them be accountable and wants them to show what they'll do with our money (ahem: unlike the first 750 billion given out last fall), they just decide to go into bankruptcy and put thousands out of work. They are selfish and irresponsible. They are crooks and cowards. When UAW make anywhere from $60-80/hr (from diff. things I've read), and CEO's make billions- they have put themselves in this position.

OTOH: I have tremendous sympathy for the hundreds of small dealerships that are being disenfranchised and put under by the big corp. They are the ones who will hurt. Their communities will hurt. It's unfair for the small dealerships, and it pains me to see a family business go under because of a corrupt/irresponsible larger corporation.

[tulip]

In my former job, I had to travel alot and rent alot of cars. I found the Chryslers to be by far the most comfortable of rental cars (the Chevy Impala is the WORST). However, I would never buy one. The two smaller cars by Chrysler are/were the Dodge Neon, which was/is a cheap little piece of cr*p, and the Pontiac Vibe, which isn't so bad because it's actually a Toyota Matrix. I actually considered buying on a few years back when I had to buy a car.

Like Irulan, I wanted a small, efficient wagon, and the pickin's were slim. Toyota Matrix/Pontiac Vibe fit the bill, as did the Mazda 3, VW Jetta Wagon, and VW Rabbit. The Honda Fit had not yet come out in the US at the time. I ended up with the VW Rabbit and I'm oh-so-pleased with it, although there's no excuse for it not being a hybrid diesel. Lucky for me, I work from home and don't drive too much.

With the exception of the Vibe, none of the American car companies made any car that I would consider even considering to buy. Not one.

While I don't wish misfortune on anyone, the dealers were part of the problem. Only the lawyers and accountants will end up winners in this ordeal, although maybe we'll end up with some of the very fuel-efficient and much-better-than-the-70s hatchbacks that Fiat has to offer.

[Biciclista]

PS UAW workers don't make 60-80 an hour

According to the Indianapolis Star:
Base wages average about $28 an hour. GM officials say the average reaches $39.68 an hour, including base pay, cost-of-living adjustments, night-shift premiums, overtime, holiday and vacation pay. Health-care, pension and other benefits average another $33.58 an hour, GM says. - September 26, 2007 UNITED AUTO WORKERS OFF THE JOB, Striking back at globalization. By Ted Evanoff

[Tri Girl]

PS UAW workers don't make 60-80 an hour

According to the Indianapolis Star:
Base wages average about $28 an hour. GM officials say the average reaches $39.68 an hour, including base pay, cost-of-living adjustments, night-shift premiums, overtime, holiday and vacation pay. Health-care, pension and other benefits average another $33.58 an hour, GM says. - September 26, 2007 UNITED AUTO WORKERS OFF THE JOB, Striking back at globalization. By Ted Evanoff

Thank you for proving me wrong. I had read late last year an article online stating that they made that type of money. It was on a major news website (can't remember which one). I had false information.
Ok- so the CEO's are the ones I can be hateful toward with their outrageous salaries now.
I'm glad you posted that.

[Eden]

PS UAW workers don't make 60-80 an hour

According to the Indianapolis Star:
Base wages average about $28 an hour. GM officials say the average reaches $39.68 an hour, including base pay, cost-of-living adjustments, night-shift premiums, overtime, holiday and vacation pay. Health-care, pension and other benefits average another $33.58 an hour, GM says. - September 26, 2007 UNITED AUTO WORKERS OFF THE JOB, Striking back at globalization. By Ted Evanoff

umm 28 + 33 does equal 61, so its not so off base, but from what I understand there is a bit of misinformation out there that comes from the auto makers.... who often quote the average salary of their employees based on their salaries, their benefits and the benefits that they are still paying retirees.

[Irulan]

In my former job, I had to travel alot and rent alot of cars. I found the Chryslers to be by far the most comfortable of rental cars (the Chevy Impala is the WORST). However, I would never buy one. The two smaller cars by Chrysler are/were the Dodge Neon, which was/is a cheap little piece of cr*p, and the Pontiac Vibe, which isn't so bad because it's actually a Toyota Matrix. I actually considered buying on a few years back when I had to buy a car.

Like Irulan, I wanted a small, efficient wagon, and the pickin's were slim. Toyota Matrix/Pontiac Vibe fit the bill, as did the Mazda 3, VW Jetta Wagon, and VW Rabbit. The Honda Fit had not yet come out in the US at the time. I ended up with the VW Rabbit and I'm oh-so-pleased with it, although there's no excuse for it not being a hybrid diesel. Lucky for me, I work from home and don't drive too much.

With the exception of the Vibe, none of the American car companies made any car that I would consider even considering to buy. Not one.

While I don't wish misfortune on anyone, the dealers were part of the problem. Only the lawyers and accountants will end up winners in this ordeal, although maybe we'll end up with some of the very fuel-efficient and much-better-than-the-70s hatchbacks that Fiat has to offer.

Funny, that is almost the same exact list I had when shopping. I ended up with the mazda. I'm not totally happy with the mileage, but it has everyhing else I wanted.

The Fit is a nifty little car but at the time we were looking the trim level options were basic, basic or basic. Euro cars weren't on the list mainly for price, but also having owned a VW, my personal experience is that I would never buy another. Anyway....

[smilingcat]

Well for what its worth, Chrysler bankrupcy seems to have hit a snag. The disenfranchised dealers are making abig stink. Indiana state pension is making a big stink.

When the CEO was asked about the cost saving by scuttling nearly 800? dealers, the CEO had no clue. A very bad answer.

What's really amazing to me is that Toyota has managed to squirrel away over $110 billion into the bank. I knew they were scrooge and I really hate their kind of corporate culture but you do have to wonder how Toyota manages to have a big fat piggy bank while GM is in debt to the tune of $60billion.

And why do GM, FORD and Chrysler insists on building the dinasours? The big three had to be dragged, kicking and screaming to install collapsable steering column, safety glass for windows, seat belts, airbags, catalytic converter... Other manufacturers just said ok.

And frankly, the design shop for the big three have no vision of design. Look at the Itallians, Germans, Scandanvians, English and even Japanese. Japanese perspective of the world is so different than the western culture so you would think that their design would not appeal to us ... but the Japanese have set up a design house here in California and staffed by Californians who have the california vision. Why doesn't the big three follow suit.

As for the dealers who are getting the raw end of the deal, I really do feel bad for them. And at the same time, don't you think they should have been paying attention to their sole source, Chyrsler and its financial status and thought about an exit strategy...

In bankrupcy, interested parties get the short end of the stick. Dealers are getting it big time. Very sad.

I'm thinking of my own exit strategy, I've taken nearly 20% pay cut. And will be expecting to see more lay offs. I also see mandatory shutdown days without pay over the July 4 holiday (2 weeks), labor day (2 weeks), Thanksgiving (2 weeks) and maybe all of december. Our balance sheet is looking very weak. Our bookings and potential bookings are just not there. Our book to bill ratio is well under 1.0 (company is shrinking/losing business). Things are not happening. I have no program to manage I have become a burden to the company not an asset. At my age this is very bad. Rather than waiting, I'm doing something about it.

1. my mortgate has less than 9 years left. But I may refi for 30 years to reduce monthly mortgage in case I lose my job. Reduce my monthly burn-rate reduce monthly burn rate in excess $1500/month.
2. not taking any vacation. Accrue as much as possible so that it gives me additional money when I do lose my job.
3. maintain my zero balance on credit card. I have a COSTCO AMEX, and have Visa as a backup.
4. have stocked up so we have maybe 6 month supply of food ... If I lose my job, we can live off our stored supply for that long without having to go shopping. just minimal shopping.
5. digging up my business contacts and renewing them. But then again we are all in the same boat.
6. thinking of alternate path. Rent my house out and move to a cheaper locale. positive cash flow on my house.
7. or sell my house and take early retirement.

yes bit worried.