Dieter Zetsche, the new German CEO of the Chrysler group, told dealers what they wanted to hear last week: He likely won't abandon incentives immediately.
That reassured dealers at a special meeting in Pontiac, Mich., who were nervous about the sweeping management changes under way at the company.
'We were concerned about having someone in charge of the company who didn't understand the North American car market,' said Fred Brillanti, chairman of the Dodge national dealer council, who attended the meeting.
But Zetsche was careful to make no long-term promises on incentives, which fuel sales but cut profits. He told dealers Chrysler must reduce its dependence on them, but he did not outline just how he would do that. He did say that he would do whatever it takes to remain competitive in the marketplace.
'I guess that means incentives will continue if we need them to compete,' Brillanti said. '(Chrysler's) not interested in losing market share.'
If the meeting was low on specifics, it was long on good vibes. Zetsche reassured dealers that he cared about their businesses and wanted to listen. That shifted dealers' attitudes from uncertainty about Zetsche to cautious optimism. So the meeting was an important first victory for the new CEO, who has been cast in the role of Chrysler's savior in its battle to return to profitability.
Incentives have been partly blamed for the skyrocketing costs that led to the Chrysler group's $512 million third-quarter operating loss and ultimately to the management shake-up that put Zetsche in charge.
Dick Withnell, vice chairman of the Dodge dealer council, said that Zetsche suggested that incentives will continue as a short-term strategy to keep inventories in line. The company also announced it would shut three factories during the week of Nov. 27.
Zetsche's long-term strategy likely will focus on producing attractive vehicles that don't need special deals to sell, Withnell said. But that's an oft-mentioned solution to the incentives problem that has so far proved difficult to achieve.
CLOSE RELATIONSHIP KEY
Zetsche's comments came during a meeting he called to introduce himself to the dealer councils and to answer their questions about the management shake-up. CEO Jim Holden and Ted Cunningham, executive vice president of global sales and marketing, lost their jobs in the shake-up. Both Holden and Cunningham had close relationships with dealers.
In an interview after the meeting, Zetsche said he told dealers that Chrysler is in 'a difficult situation,' but the company is committed to engineering a turnaround. Dealers must be part of the solution, he said.
'This is all about a very close relationship,' Zetsche said. 'You can claim a good relationship in good times, but it gets proved in bad times. That's where we are.'
Tom Barenboim, a Methuen, Mass., dealer who is chairman of the Chrysler-Plymouth-Jeep national dealer council, said Zetsche's candor, responsiveness and grasp of the business earned dealers' confidence.
'I'm more pumped now than ever,' Barenboim said. 'I think maybe something dramatic needed to happen in such a competitive market.'
Jerry Bowman, vice chairman of the dealer council, said Zetsche was open, didn't dodge any questions and made it clear he wanted to work with dealers.
'(But) there's still a lot of apprehension,' Bowman said. 'It has to be proved to us that whatever system (Zetsche) puts in, whatever changes he makes, the people he puts in, are positive. We have to wait and see.'