Chrysler: How does axing dealerships save money?

[kinosh]

Unless Chrysler decides to sell direct, aren't the dealers Chrysler's customers? With less customers, how does Chrysler expect to make money (or lose less money)? I don't get it.

 

[chazzy]

Re: Chrysler: How does axing dealerships save money?

By shrinking the amount of dealerships out there they have reduced the competition between shops. With less supply of cars they are able to charge a higher price for the car, because their is no competition to give the customer a better price. The customer no longer has the bargaining power they once had when there were several dealerships in the local area. Also, it will allow them to reduce their inventory, which in turn will reduce their costs. Whether this works or not is a different story. Hope this makes sense.

 

[O'Royken]

Re: Chrysler: How does axing dealerships save money?

Ask any car salesman and they say their customers are price shopping online. No need to have all those dealerships.

 

[cassiusclay]

Re: Chrysler: How does axing dealerships save money?

By shrinking the amount of dealerships out there they have reduced the competition between shops. With less supply of cars they are able to charge a higher price for the car, because their is no competition to give the customer a better price. The customer no longer has the bargaining power they once had when there were several dealerships in the local area. Also, it will allow them to reduce their inventory, which in turn will reduce their costs. Whether this works or not is a different story. Hope this makes sense.

sort of....

chrysler's goal has been to consolidate all their stores, they want every stroe to be a "six pack" with all stores having chrysler, jeep and dodge. resistance from the smaller dealers and the outlay of cash to buy out these smaller stores has stopped them from accomplishing their goal. the dealers that were given notice were under performing dealers with no potential of merging with another store.

the next round of notices will be to stand alone dealers urging them to merge with another store. also, the majority of dealers out there are out of trust with their floor plan banks, chrysler will audit financials and pull the plug on any dealer without sufficient operating cash in the bank.

it's gonna get ugly...

 

[kinosh]

Re: Chrysler: How does axing dealerships save money?

By shrinking the amount of dealerships out there they have reduced the competition between shops. With less supply of cars they are able to charge a higher price for the car, because their is no competition to give the customer a better price. The customer no longer has the bargaining power they once had when there were several dealerships in the local area. Also, it will allow them to reduce their inventory, which in turn will reduce their costs. Whether this works or not is a different story. Hope this makes sense.

I'm not in the automotive business so I may be wrong here, but doesn't Chrysler sell cars to the dealers at a fixed price (not counting the cash back promotions)? Any discounts to car buyers would be the dealers call, so it's the dealer margin that suffers, not Chrysler's.

As long as Chrysler sells cars, why would they care if there are one or ten dealerships in an area?

 

[Jeff Jones]

Re: Chrysler: How does axing dealerships save money?

Who is really worse off?

The guy who loses his job at Chrysler or the guy who is still trying to sell them?

 

[kinosh]

Re: Chrysler: How does axing dealerships save money?

Who is really worse off?

The guy who loses his job at Chrysler or the guy who is still trying to sell them?

The original question is how are the two related? How does axing the dealer salesmen save the job of the Chrysler workers?

 

[Seymour]

Re: Chrysler: How does axing dealerships save money?

They should close all their dealerships - they have a bad product - just like GM - of all the cars they make three are decent - Yukon, Cadillacs and Vettes.