Behind the Scenes @ Chrysler Dealers

[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.

[Biciclista]

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.

It's the same way where I work. Our factory workers are demonized by the press for demanding health benefits and cost of living pay raises, but the execs are getting salaries in the millions coupled by bonuses and dividends. These guys just do NOT do that much more for the company to make them worth 100 of me.

[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.

[myjas]

I am UAW here and do not make 60-80 an hour. That figure is with benefits and anything else companies have to pay for us.

[beth h]

While I think that thousands of autoworkers losing their jobs is awful, I can't pretend I'm shocked about any of this.

We all have the ability to make choices in our lives: how and where to live and what to do for a living, and how we get around.

I have lived car-free for nearly 20 years. I have watched the high cost of driving continue to be subsidized (and therefore largely camouflaged) by government. Instead I would prefer that the government began subsidizing mass transit, mixed-income housing and job re-training, smart-growth and urban density, and smaller, more localized economies of scale for everyone. We don't need McMansions OR McCars. What we DO need is more community, and perhaps the beginning of the end of car culture is key to developing that for everyone.

We saw (or should have seen) this collapse coming for decades. Those of us who already live closer to the ground simply won't have as far to fall. Those who fall farther will need more help to adapt. Instead of putting off the inevitable, let's help those who are falling learn the new skills and mindset they'll need to help them transition to a simpler, more localized life that the end of car culture really means. Teach community gardening; barter; scavenging, recycling/repurposing and creating as alternatives to constant consumerism. Teach the laid-off auto workers new skills and put them to work rebuilding our crumbling inner cities and improving transit-bike-pedestrian travel in them. Elevate teachers to their rightful place of respect and rebuild the schools as smaller, leaner, more independently-functioning institutions that answer to their local communities. Utilize parent-teacher-COMMUNITY partnerships to give our kids the skills they'll REALLY need to adapt to a changing world: creative, independent thinking, conflict resolution and teamwork, and the ability -- and WILLINGNESS -- to live on less.

Meanwhile, the powers-that-be at the Big Three get NO sympathy from me. The bloated, consumerist way of life their industry represents is part of the past, not the future.

[shootingstar]

While I think that thousands of autoworkers losing their jobs is awful, I can't pretend I'm shocked about any of this.

We all have the ability to make choices in our lives: how and where to live and what to do for a living, and how we get around.

I have lived car-free for nearly 20 years. I have watched the high cost of driving continue to be subsidized (and therefore largely camouflaged) by government. Instead I would prefer that the government began subsidizing mass transit, mixed-income housing and job re-training, smart-growth and urban density, and smaller, more localized economies of scale for everyone.

Howdy, it's 29 years car-free for myself so far. I was starting to feel like the car-free existentialist elder in a forest of cyclists-car drivers.

Canada is helping GM with the bail-out..supposedly to assist in their pension. Whatever. It's alot of taxpayers' moolah $.

Will be interesting to see if these big car manufacturers will be able to reinvent themselves to a completely new type of car. Meanwhile there have been recent documentary TV news footage on glimmerings of the electric car start-ups...but that needs a very different infrastructure to power up for some of our long North American driving distances.

[Mr. Bloom]

I am UAW here and do not make 60-80 an hour. That figure is with benefits and anything else companies have to pay for us.

myjas, it all counts.
I'm an executive officer in my company and last year, the value of my compensation was 90% salary and 10% benefits (bonus was $0 because it is tied to a high level of profitability even though my workload has never been heavier)...and on top of that:
- between copays and premiums, I pay most of my health coverage
- there is NO PENSION or Retiree Health Care to look forward to
- I'm paid the same whether I work 40 hours/week or 60 hours/week...and the latter is more the norm...and
- I never get to turn it off because when you have employees and families relying on you to make good decisions for everyone's mutual benefit and security, well, you care and wind up being on 24 hour call.

Don't misunderstand, I'm not complaining, but I'm simply pointing out that it is the entire package that creates value, not just the hourly wage...

[ilima]

myjas, it all counts.
I'm an executive officer in my company and last year, the value of my compensation was 90% salary and 10% benefits (bonus was $0 because it is tied to a high level of profitability even though my workload has never been heavier)...and on top of that:
- between copays and premiums, I pay most of my health coverage
- there is NO PENSION or Retiree Health Care to look forward to
- I'm paid the same whether I work 40 hours/week or 60 hours/week...and the latter is more the norm...and
- I never get to turn it off because when you have employees and families relying on you to make good decisions for everyone's mutual benefit and security, well, you care and wind up being on 24 hour call.

Don't misunderstand, I'm not complaining, but I'm simply pointing out that it is the entire package that creates value, not just the hourly wage...

Even factoring in bennies, active workers aren't getting that much. The $60-80 was a bogus number that has been repeated over and over.

[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.

[Mr. Bloom]

I've not read all the posts...but there's more to it. Being in banking for 25 years, I do know many dealers in the industry affected by this.

First: The franchise agreement is cancelable. Period. Always has been...and the dealers knew it when they "bought" (better word is "were granted") it.

Second: Factors affecting the choices: CUSTOMER SERVICE ratings, volume, conformity to brand requirements, focus (are they multibrand or single), etc.

Third: Chyrsler has ONLY FOUR MODELS in their '09 line up. This is no longer a full brand company...and hasn't been for years.

Fourth: Any car dealer worth their salt started reducing inventory MONTHS ago. The fact that this guy has 125 on his lot strikes me as contrary to sound business judgement in the current environment...unless he is a high volume/high customer satisfaction dealer...and if he was...he wouldn't have gotten the ax.

My heart's not bleeding (and I'm generally a compassionate person...)

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

Ah, but Mimi, don't forget the "Job Bank" as well.