Chrysler dealers are profitable, want more product
Dealer since: 1990
Dealership: Bob & Chuck Eddy Chrysler-Dodge-Jeep-Ram, Austintown, Ohio
Average monthly sales: 120 new, 60 used
Quote: "The bottom line is, Chrysler dealers are making more money than they've ever made, and there are more of us making it."
Chrysler Group spent 2013 chasing bogeys: from extending a nearly four-year-long sales streak, to eliminating bugs in the software of its new mid-sized SUV to prepping for a quirky initial public stock offering. All the while, most Chrysler dealers were cashing in with record store profits, a much-improved volume growth program and a new financing partner in Chrysler Capital that made it easier for customers to get credit.
As Chrysler's dealer council representative to NADA in 2009 and the owner of Bob & Chuck Eddy Chrysler-Dodge-Jeep-Ram near Youngstown, Ohio, Chuck Eddy was an active player in Chrysler's 2009 bankruptcy as well as its subsequent revival.
Eddy became chairman of the Chrysler National Dealer Council on Jan. 1. He spoke with Staff Reporter Larry P. Vellequette about what lies ahead in 2014.
Q. How was 2013 for Chrysler dealers?
A. Dealers in general are having a great year. Profitability is up; it's really been the cornerstone of [previous chairman] Gary Brown and my run in the last year, to focus on profitability. My store is up -- we're having a great profit year. Our sales will be up about 10 percent over last year.
What are the major issues Chrysler dealers face?
The biggest issue we face right now is inventory. Inventory seems to be one of the issues plaguing us, and I think a lot of it has to do with the supply chain. We have some struggles getting the stuff we really need, like the Jeep Grand Cherokee, Cherokee, Wrangler and the minivans. With the tight parts supply come the strains in the service department. I don't think dealer profitability or cash flow are the issues anymore.
What do you hope to accomplish as chairman of the dealer council?
We're going to stay on task with dealer profitability. I also hope to really have a transparency, where dealers can really get to their council guys, where they can bring their issues to their national representative and have an open discussion.
I think we definitely have a couple brand issues, with SRT and Fiat.
The things that I like are the guys that are running the brands and are running Chrysler. They've got one thing on their minds, and that's selling cars.
Are Chrysler dealers profitable?
[The percentage] is a big number, in the upper 80s or low 90s. It's as high as it's ever been, and the average is still climbing. The bottom line is, Chrysler dealers are making more money than they've ever made, and there are more of us making it.
Are Chrysler dealers making enough money on new-car sales?
No, because we never do. We could be averaging $2,000 a car and it's never enough. We're always going to be looking for ways to make more money. That's part of my mantra -- I've always got a concern for margin.
Have things calmed down on the facilities front?
I think we've got one of the fairest, most understanding OEMs, and we definitely have an extremely understanding network guy in Pete Grady. I do believe that our facilities need to meet a certain standard to represent the company well; I don't think that's necessarily wrong. But I do think it's wrong when there is a one-size-fits-all mentality, and I don't think we have that with Chrysler.
Were dealers given guidance or required to improve their stores' information technology infrastructure? Are dealerships doing so or was an opportunity missed to bring the latest technology into stores?
I think they were given guidance. Chrysler has its hands full with DealerCONNECT. Starting out, I don't think they were aware of all the things that were going to go on with the IT, especially in the service departments. At the end of the day, they've been working it out, and everybody that's been working on it has seen better and better performance. There's a whole team working at Chrysler that is working to improve the IT with the dealers. It's not going to happen overnight.
Do you think Fiat dealers are happy with the brand? What could it be doing differently?
I don't think the dealers are happy with the brand. I think there are three groups of dealers. You have the group that went after this thing full-bore, that fully invested in facilities, and they're saying, "Where is the product? What are we going to do to help my dealership?"
Then you have another group of dealers that have a studio tied to their main dealership. And theirs is a maintainable operation because they have their expenses tied into their main dealership.
Then there's a third group of dealers that were under the conviction that this whole thing flies if Alfa Romeo comes. And I don't think they ever committed to the Fiat brand. But I'm in the Fiat business to be a Fiat dealer, not an Alfa dealer.
I'd like there to be a better product mix. You don't have a sustainable business model with two cars -- a two-door and a four-door -- and others coming in a few years. You need more product. I think the factory has the same concern. I think they're trying to get product to us as quickly as they can if it works. If you're a Fiat dealer, you need to be concerned about being a Fiat dealer.
How many Fiats do you think you need?
There should be four or five products on that showroom floor, with variations on each one. I think the Fiat brand is a great brand. It's a great car. But I don't like talking about Alfa, because right now, as Fiat dealers, I think we have to focus on Fiat.
What do you think is going on with SRT?
Ralph [Gilles, head of Chrysler design and the SRT brand] gives us a great product, a good quality car. But I think SRT definitely needs a marketing strategy going forward. We have a really cool hot rod in the Viper. We need to keep building that car, and I think we need to market that car.
The dealers that are in have a lot invested; they need it to succeed. What we really need to do is really get those babies pushing with marketing and we really need to sell cars. I think with SRT, we just have to nudge it a little bit. We just need to market them better.
Other than a lack of inventory, what product problems do Chrysler dealers face?
The Chrysler 200 convertible is a good example of a Chrysler product that's built well that just got a little tuckered out. I don't see a problem anywhere in my fleet. I wish they could build me more Ram trucks, more Grand Cherokees, more Town & Country minivans. The incentive mix is pretty good. The volume growth program is working. Dealers are staying competitive. There are all of these positives going on right now, and we've got a good product line right now. If those are the biggest problems we've got, then we don't have a problem.
Fiat-owned Chrysler began a product onslaught three years ago with the 2011 Jeep Grand Cherokee and 17 other new or revised vehicles. Those vehicles are beginning to come back on trade. Are those Chrysler customers staying loyal?
Yes, and consideration is up and conquest is up also. The Grand Cherokee created a halo effect, and you compound that with the Chrysler 300 -- you get people into those two cars and they speak for themselves. Our loyalty is way up also.
How have you seen Chrysler's quality improving? How do you notice it?
I notice it in the service department, with average service hours, with warranty expense. I can't get a warranty labor increase because the [warranty work] and the hours we're doing [warranty work] is down.
I can't praise this company enough for what they did with Cherokee, holding back the launch, because we have been able to take those vehicles right off the truck and sell them. I can't say enough about [Chrysler CEO] Sergio [Marchionne] and Mike Keegan [Chrysler senior vice president for supply chain management] and what they've done with this. It's been almost genius what they've done.
Are you happy with what the factory is doing to support dealers' certified pre-owned sales?
Yes. They are out there and making it a viable option with Chrysler. They're trying to do everything they can to boost them. It builds value and it helps us sell more used cars.
What are Chrysler dealers doing to attract more service business? Is the factory helping?
The factory's not helping because they're building a better car, so it's a double-edged sword. But they are providing me with equipment to help boost my service and parts revenue.
We're an Express Lube dealer. We try to do between 30 and 45 oil changes a day, and upsell from there. We were committed to Wi-Advisor right out of the chute. It's helping. But beyond that, we just constantly open up the service department, six days a week, and Saturdays have become our busiest days. I have 20 cars in my loaner car fleet.
What are Chrysler dealers doing to attract more F&I business?
We're automatically seeing more F&I business because we're selling more cars. Chrysler's becoming more aggressive with their Chrysler service program, the service contracts, and the outside vendors are stepping it up, too.
I think Chrysler's working hard to get their piece of the action. But it's like the wild, wild west, and everyone's trying to get their piece of the action right now.
How can the factory help you sell more vehicles?
Build the cars that we need. Build the option package mix that we need. Keep the advertising as crisp and clean as it can be, like it has been. Keep the marketing out there. Keep the cars contented properly. Keep the [volume growth program] attainable, but just out of reach, to give dealers incentive to sell more.
What's missing in the product lineup?
Do I think we should have a [Dodge] Challenger convertible or a [Jeep] Grand Wagoneer right now? Yes. I hope the new convertible replacing the 200 is a 'Cuda convertible.
I would tell [designers at] Chrysler to just keep doing what they're doing. This management team, this owner, really does a good job. We have to be sensitive to each other, the factory and the dealers, because we both have to run profitable companies.
You can reach Larry P. Vellequette at firstname.lastname@example.org.