More than six months after Chrysler and General Motors began dumping dealerships, many surviving dealers anticipate a tough time keeping millions of those dealerships' orphaned customers in the family.
Some customers are angry because their longtime dealership is closing, dealers say. Other customers have turned away from Chrysler and GM because of the automakers' taxpayer bailouts and bankruptcy filings. Still others just won't drive the extra distance to the next-closest store.
GM and Chrysler are designating dealerships to pick up the customers from each rejected store. But they "need to be innovative" to keep their orphaned customers, says Michelle Krebs, a senior analyst with Edmunds.com. "Ford, Hyundai, everyone else wants those customers, too."
It can be done. In November, the percentage of car buyers who traded in a Chevrolet vehicle and replaced it with another GM vehicle improved to 59 percent, from 55 percent in November 2008, Edmunds' data show. In mid-November, GM began offering extra incentives, as much as $2,000, to some of its orphaned owners.
But loyalty plunged at Chrysler Group in November, Edmunds says. For example, among customers who traded in a Chrysler-brand vehicle in November, 32 percent stayed with the Chrysler family, down from 46 percent a year earlier.
Observers cite three differences between Chrysler and GM:
1. Chrysler stripped its 789 rejected stores of their franchises in June while many, if not most, of GM's 1,350 rejected stores are still operating.
2. GM's incentives to orphaned customers began in November, while Chrysler's expired during the summer. Chrysler offered limited owner loyalty incentives in November, but not specifically to orphaned customers, company spokeswoman Kathy Graham said. She also said Chrysler didn't return to what it considers a normal level of advertising until mid-November.
3. Chrysler owners seem more concerned about the company's viability than GM customers, Krebs says.