Chrysler Dealerships Get the Shaft on Inventory - GM to close 1100 update

The Detroit Free Press is reporting on the closed Chrysler dealership details and it appears these dealerships are stuck with the existing inventory and all of the parts on hand. Talk about guaranteeing these dealerships go down in flames, this has to be it:

Now that it has notified 789 dealerships they would be terminated, Chrysler must sell the 44,000 vehicles sitting on their lots in the next few weeks without driving prices to fire-sale levels for remaining dealers.

"It's going to be a challenge even with the factories closed to redistribute that number of vehicles and sell them in a short period of time," said Mike Jackson, CEO of AutoNation, the nation's largest auto retailer. Even a giant like AutoNation will lose seven Chrysler, Jeep and Dodge dealerships that employ 400 people.

Despite that, Jackson called the closings painful, but necessary.

"If you're over-dealered, you can't compete successfully for capital and talent," Jackson said. "Over the last 20 years, there has been a migration of capital and talent from the domestic franchises to the Asians, and that has to be reversed."

Chrysler said it would move the inventory from the rejected dealers to those that stay open and try to sell most of it over the next four to six weeks. But it's unclear who gets the money from the sale of those vehicles.

"Chrysler LLC is unable to repurchase your new vehicle inventory," the company said in a letter to the closing dealers. "Chrysler LLC is unable to repurchase your Mopar parts inventory."

Chrysler's Steven Landry, executive vice president of North American sales and marketing, said there would be no compensation to those dealers who owe various amounts to Chrysler Financial for that inventory.

It's one thing to close them, plus lose all of those jobs, but to stick it to the business owner on parts and inventory too?

Now GM has announced closing 1100 dealerships:

General Motors Corp., facing a probable bankruptcy filing by June 1, is telling 1,100 U.S. dealers it plans to terminate them as the automaker starts shrinking its retail network.

None of the dealers are being shut now, pending discussions “over the next few weeks” GM said in a statement. The dealers hold about 120,000 unsold autos valued at about $2.5 billion, said a person familiar with GM’s plans who asked not to be identified because those details aren’t public.

The closings are GM’s first step toward paring U.S. dealers to 3,600 from 5,969 by the end of next year. With fewer outlets, the survivors each may be able to sell more cars at higher prices, boosting profit.

Update: GM will take back inventory of the closed dealerships. GM is not going to renew contracts when they expire. That's a better way and will give less jolt to the economy.

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Chrysler Dealerships Get the Shaft on Inventory

We have been asked to bank roll the banks, pony up to save floundering states and prop up “to large to fail business’s” and the top of the pile stand by while the unions are treated as secured stock holders over the risk takers who have been maligned as being speculators. These actions of strong armed management to discard the goodwill that it has taken many dealerships years to develop and reward the remaining with the results of others sweat and toil.

We no longer see good management practice to encourage, business not to disable them. In the present our energy must be focused on disclosure and not be ashamed to admit our failures (learning points) and pick up and re envigurate the electorate to a stronger economy.

Let us not continue using of “Rules for Radicals”

Saul Alinsky provides a collection of rules to guide the process that is being used in the Obama administration. .He emphasizes these rules must be translated into real-life tactics that are fluid and responsive to the situation at hand.

Rule 1: Power is not only what you have, but what an opponent thinks you have. If your organization is small, hide your numbers in the dark and raise a din that will make everyone think you have many more people than you do.

Rule 2: Never go outside the experience of your people.
The result is confusion, fear, and retreat.

Rule 3: Whenever possible, go outside the experience of an opponent. Here you want to cause confusion, fear, and retreat.

Rule 4: Make opponents live up to their own book of rules. “You can kill them with this, for they can no more obey their own rules than the Christian church can live up to Christianity.”

Rule 5: Ridicule is man’s most potent weapon. It’s hard to counterattack ridicule, and it infuriates the opposition, which then reacts to your advantage.

Rule 6: A good tactic is one your people enjoy. “If your people aren’t having a ball doing it, there is something very wrong with the tactic.”

Rule 7: A tactic that drags on for too long becomes a drag. Commitment may become ritualistic as people turn to other issues.

Rule 8: Keep the pressure on. Use different tactics and actions and use all events of the period for your purpose. “The major premise for tactics is the development of operations that will maintain a constant pressure upon the opposition. It is this that will cause the opposition to react to your advantage.”

Rule 9: The threat is more terrifying than the thing itself. When Alinsky leaked word that large numbers of poor people were going to tie up the washrooms of O’Hare Airport, Chicago city authorities quickly agreed to act on a longstanding commitment to a ghetto organization. They imagined the mayhem as thousands of passengers poured off airplanes to discover every washroom occupied. Then they imagined the international embarrassment and the damage to the city’s reputation.

Rule 10: The price of a successful attack is a constructive alternative. Avoid being trapped by an opponent or an interviewer who says, “Okay, what would you do?”

Rule 11: Pick the target, freeze it, personalize it, polarize it. Don’t try to attack abstract corporations or bureaucracies. Identify a responsible individual. Ignore attempts to shift or spread the blame.

We must consider all not few, energize our prospective partys but only after our house is in order.

Though a lot of this information is helpful and usable we must be vigilant of the goal of what is being done. There in lies the true prize.

Information expressed in part is from Rules for Radicals

In 1971, Saul Alinsky

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Ken Rosenlund