Fiat Chrysler's plan to add about 380 dealerships to its U.S. network of around 2,500 stores has run into opposition from dealers who say the move is a threat to their existing businesses.
Some have complained to state authorities, two citing a proposed FCA store in the New Orleans suburb of Kenner, La., that would be built on a vacant lot hemmed in by a massive swamp on one side and Lake Pontchartrain on another. The problem, local dealers say, is that three existing FCA stores are situated near the accessible sides of the planned Lakeshore of Kenner dealership. One is less than 5 miles away.
The decision to expand the network -- confirmed by two dealers familiar with the plan and an internal FCA source -- goes against the recommendation of FCA's dealership location consultant, Urban Science, according to the FCA insider. The source, speaking on condition of anonymity, said the Urban Science data "does not support these additional points."
Calls to FCA and Urban Science were not returned.
A list of the new locations was not available, but according to dealers, the new points include the site in suburban New Orleans, three in metro Houston and others in large and small metro areas nationwide.
FCA is in the midst of the network expansion, which dealers familiar with the plans and the FCA source say is meant to increase sales and win back market share. But it comes at a difficult time for some FCA dealers.
The automaker's sales have declined for five consecutive months. Even the once red-hot Jeep brand has cooled off. FCA's U.S. market share slipped to 12.0 percent in the fourth quarter of 2016 from 13.6 percent in the same period of 2015.
Meanwhile, dealer profitability has been squeezed after FCA last fall reworked its controversial stair-step incentives, known as the Volume Growth Program. The change dramatically cut incentive payments to retailers who meet aggressive sales goals. That move and others did help FCA boost its North American profit margin from 6.4 percent in 2015 to 7.4 percent in 2016, the highest it has been since the company emerged from bankruptcy in 2009.
Dealers also are hampered by a thinner product lineup as FCA transitions North American production capacity away from sedans and more toward SUVs, crossovers and pickups. Production of the Dodge Dart, Chrysler 200 and Jeep Patriot ended last year.
Production is ramping up for the redesigned 2017 Jeep Compass at its new home in Toluca, Mexico, but U.S. dealerships won't be fully stocked with the new crossover for several months. Production of the Dodge Grand Caravan has been extended as a low-cost and fleet alternative to the Chrysler Pacifica, according to CEO Sergio Marchionne.
