BERLIN -- Chrysler dealers in Germany are rebelling against new contracts designed to help revive the automaker's struggling German operations.
Chrysler's German sales dipped 14 percent in 2005, to 16,749 units.
To reverse the decline, Chrysler is reducing prices and extending warranties. The company also is introducing contracts that reduce dealer profit margins in Germany
At least one-fourth of the company's 140 German dealers are refusing to sign the contracts.
Most of the dealers rejecting the contract are exclusive dealerships that sell only Chrysler cars.
The rebellion threatens to hamper Chrysler's push to boost its sales in Germany. This year the automaker wants to relaunch its Dodge brand in Europe.
The automaker's dealer association has been criticized for accepting the new contracts.
"Before there were even negotiations, the association surrendered," said one dissatisfied dealer.
"The new system may possibly offer consumers some advantages," another dealer admitted. "But we will not earn anything anymore."
In a document dated Dec. 20, obtained by Automobilwoche, DaimlerChrysler Vertriebsorganisation Deutschland, which handles Chrysler sales in Germany, called for a "radical change in our business system." Automobilwoche, like Automotive News, is owned by Crain Communications.
Dealers complain they have come under pressure to accept the contracts.
Some affected dealers said the Chrysler sales organization is threatening to cancel loans. Multiple-brand dealers say DaimlerChrysler Vertriebsorganisation Deutschland is threatening to stop them from selling Mercedes cars.
Bernd Hullerum, the head of Chrysler Germany, defended the changes.
"Naturally, our new business model is a cultural revolution," Hullerum said. "But it was developed in close coordination with the dealer association."
DaimlerChrysler Vertriebsorganisation Deutschland said average dealer profit margins will be cut to 14 percent, from 17 percent.
Hullerum outlined some benefits of the changes. Warranties have been raised to four years or 31,000 miles, and vehicle prices have been reduced 3 to 9 percent, he said.
In addition, dealers receive new residual value coverage for leasing contracts and training. Over the next three quarters, there is a 3 percent transition bonus.
Standards also have been simplified.
Hullerum said he has applied no inappropriate pressure on dealers but merely has tried to communicate "the advantages of the radically changed business model."
You may e-mail Bettina John at [email protected]
You may e-mail Jens Dralle at [email protected]