Chrysler dealers scheduled to shut down on June 9 say they are using all available options to get rid of new vehicles -- while they're still allowed to sell the cars to customers.
Some dealers are offering customers the same price the store pays for the vehicles. Other retailers say they're focused on selling their cars to surviving Dodge, Jeep and Chrysler stores.
The rejected dealers fear being stuck with cars after Chrysler terminates their franchises. That could force them to sell their inventory as used vehicles at auction, where low prices will devalue the new vehicles at surviving dealerships.
Dealers have to "play every angle early on," said Tony Albanese, director of operations for Nelson Dodge in Martinsville, Va. "Nobody wants to take these cars to auction."
Chrysler LLC last week told 789 dealerships, including Nelson Dodge, it planned to discontinue their franchises as part of its bankruptcy reorganization into a company controlled by Italian automaker Fiat S.p.A. The discontinued stores -- about a quarter of those currently selling Chrysler, Dodge and Jeep brands -- may not sell the automakers' new vehicles after June 9.
Chrysler says it has a plan in place that can help dealers redistribute their leftover inventory by offering it to remaining dealers.
We think we can redistribute any vehicles that any dealer wants us to, spokeswoman Kathy Graham said. Dealers are not going to be stuck with cars. We have dealerships that want the vehicles.
Some remaining dealers want more inventory, since Chryslers plants have shut down until it exits bankruptcy, she said. If Chrysler finds rejected dealers a match for their inventory, theyll receive the factory invoice cost, minus factory holdbacks and advertising fees, she said.
But some dealers say theyre not so sure the Chrysler plan will work. And the June 9 deadline doesnt leave much time to get rid of the 44,000 vehicles they collectively hold, rejected dealers say."It's made it totally impossible to sell this inventory and not lose a bunch of money," said Ray Cottrell, who owns Ray's Chrysler-Dodge-Jeep in Brandenburg, Ky.
He is advertising his 24 remaining new vehicles at the price he paid the factory, plus rebates. Before he got his termination notice from Chrysler, he was asking about $1,200 more for cars and $800 more for light trucks.
The word on deals
Consumers are hearing the word about good deals on new vehicles, dealers say.
In his own conversations with dealers, analyst Himanshu Patel, of J.P. Morgan Securities Inc., has learned of "markedly increased traffic in Chrysler dealerships nationwide on consumer curiosity," he said today in a research note.
"While many Chrysler dealers report receiving low-ball offers, we sense discontinued dealers are strongly incentivized to deal while they still receive full manufacturer support."
Cottrell said four customers on Monday offered to pay about half price for cars. He's not accepting the offers, even though he hasn't sold a new Chrysler since the company declared bankruptcy April 30.
In contrast, dealer Stanley Balzekas Jr. of Chicago says he's considering a half-off discount on the 100 vehicles he has left.
"Every day, the car costs you money," he said. "What we're trying to do is mark down the price as low as possible and then give a higher price on the trade-in than we normally would."
Dealer Wade Walker in Montpelier, Vt., who is leading the Committee of Affected Chrysler Dealers in its attempts to have the dealership cuts canceled, only has seven new vehicles left. So far, he's only tried to sell the inventory to other dealers at factory cost and throw in the factory holdback.
"We would get more for our dollar, and we wouldn't tear up the market," he said. He said if that effort fails to gain traction by today, "we'll start selling and dumping."