Office supplies, overnight parcels, uniform rental, local and long distance phone calls, credit checks and gasoline - these dealer costs add up.
The Chrysler group says dealers can save at least $6 to $7 per vehicle by purchasing these items and services on an Internet site called the Five Star Market Center. The site is part of the Chrysler group's e-business services.
As a bonus, these purchases are billed every month as a line item on a dealer's regular parts statements. The dealer pays for these costs with the same check used to pay for parts.
The Five Star Market Center, which has operated for four months, has attracted about 1,000 of the Chrysler group's 4,500 dealers. With pressure to reduce costs, Chrysler group executives demonstrating the program at the NADA convention are betting more dealers will sign up to use it. The ultimate target is a savings of $500 per vehicle, said Kelly Linn, who heads the e-Connect Platform for the company.
Linn said there are no dates for reaching the $500 target, but the approach is simple. Chrysler combines its buying power with that of dealers and approaches potential vendors for reduced rates. Those savings are offered to participating dealers.
On a piecemeal basis, the lower rates may seem small, but they add up. Chrysler estimates it spends $4 billion annually in these areas, and dealers spend another $4 billion. That translates into negotiating power.
For instance, a dealer spends about $8.40 for the average overnight package via United Parcel Service. The Five Star Market Center rate using United Parcel Service is $5.99, and the entire transaction is done online, Linn said.
Every dealer must have gasoline. So the market center negotiated a gallon discount of 4.5 cents with Speedway Super America, Shell and Texaco.
'The dealer gets a line item on the dealer parts statement, and we bring measurement tools to the dealer. He can do a cost analysis on items that he may not have known the monthly/ annual cost for before,' Linn said.
At the end of January, Chrysler Financial began offering dealers savings on credit reports, charging $1.75 for each report. Dealers now pay up to $3, Linn said. To authorize a check, it also charges 0.66 percent of the amount, below the national average of 1 percent, and a credit/debit card processing fee of between 1.59 percent and 2.63 percent, also lower than the national average, she said.
Dealers also can order publications, such as manuals and forms, online.
Within several weeks, the Chrysler group will add computer services, including hardware and networking services, that would enable a dealer to link computers. Other future services include maintenance supplies, such as nonautomotive cleaners and fixtures. Health care service is another possibility, Linn said.