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Chrysler’s secrecy makes some dealers anxious

Chrysler has been sending its dealers back to class, reminding them about the importance of courtesy and communication. However, the automaker isn't following its own advice.
Chrysler Dealer Frustration
John Adamy is sales manager at Phil Spady's Chrysler-Dodge-Jeep car dealership. Spady says small dealerships like his get the least attention from corporate. Nati Harnik / AP
/ Source: The Associated Press

Chrysler has been sending its dealers back to class, reminding them about the importance of courtesy and communication: Always return phone calls. Limit wait times. Open doors for customers.

However, the automaker isn't following its own advice.

New management has said little about plans to revamp Chrysler's ailing lineup and return the once-great company to profitability. Dealers are left to wonder what they'll be selling this time next year, even as they struggle to unload unpopular models from their lots.

The lack of communication is a symptom of an automaker so focused on its grand plan that it may be overlooking the basics of running the business.

That means a tough year for the auto industry has turned into an especially trying one for Jeep, Dodge and Chrysler dealers. Sales are down almost 40 percent versus 27 percent for the industry. Dealers have seen a quarter of their ranks purged since June, when the automaker left bankruptcy protection. They're facing shortages of some current models because Chrysler shut its factories for much of the summer.

For now, Chrysler's fate and the livelihood of its remaining 2,400 dealers hang by a thread of government aid. Taxpayer money, around $15 billion, will have to keep the company afloat until its new management, Italian car company Fiat SpA, finds a winning strategy for Chrysler following two unsuccessful ownerships in the last 11 years.

The lack of information is compounded by frequent shuffling of managers. New CEO Sergio Marchionne just broomed out two brand executives appointed only four months ago. Deputy CEO Jim Press, who to many dealers has been the face of Chrysler, is on his way out.

"It is a bit unsettling after everything that we've been through to see unrest at the top," said Michael Andretta, owner of a Chrysler-Jeep-Dodge dealership in central Pennsylvania.

Dealers are impatient for details about Marchionne's five-year game plan — to be announced on Nov. 4. Many say calls to headquarters have gone unreturned or they're told to wait as the CEO tries to keep his plans secret until next month.

Chrysler spokeswoman Kathy Graham says the company couldn't provide details because the product plan just received board approval. Chrysler will present its strategy in eight meetings with dealers around the country after Nov. 4.

The silence, though, is troubling and a sign that Fiat was unprepared to take over Chrysler, said Aaron Bragman, an auto industry analyst with the consulting firm IHS Global Insight.

"This is a company that has been given a lot of taxpayer money and hasn't said a thing," Bragman said.

By contrast, General Motors Co., which left bankruptcy court a month after Chrysler and is also receiving government aid, is "shouting from the rooftops" that it's here to stay and has new vehicles on the way, he said.

"GM understands that their public image has been seriously damaged, and they need to do a lot of damage control. Chrysler has just shut itself away."

GM has run a new ad campaign that touts quality and offers a 60-day money-back guarantee. It has even held online "town hall" meetings to update customers on its progress.

For Chrysler dealers there are only vague assurances of seeing a redesigned Jeep Grand Cherokee in the spring and a new Chrysler 300 large sedan sometime next year.

Chrysler's existing lineup is weak. Flops like the Sebring midsize sedan and Aspen large SUV dragged down sales in recent years. Because the Sebring and its Dodge counterpart, the Avenger, have sold so poorly, dealers have been unable to compete in a sedan segment that made up nearly half of U.S. car sales this year. Both cars have been criticized for noisy rides and poor quality.

And this summer, the Cash for Clunkers windfall all but bypassed Chrysler because it lacked enough fuel-efficient models on lots to meet demand. With factories shut, shipments to dealers ceased. As a result, Chrysler sold just over 7,000 Dodge Calibers, its smallest and most fuel-efficient car. By contrast, Toyota sold 29,000 Corollas.

Although Chrysler's product plan hasn't been formally announced, people with knowledge of it have told The Associated Press that models with Fiat frames and engines will replace Chrysler's current small and midsize cars, and the Fiat 500 subcompact will be added to the lineup.

While the car maker has withheld its strategy from dealers, it's made other details very clear recently. In mandatory customer service classes across the nation, dealers have been told which tiles to line their showrooms with and to make follow-up calls a day after cars are serviced.

Chuck Eddy, a Chrysler dealer near Youngstown, Ohio, serves on the national dealers' council. He understands the dealers' frustration because the council hasn't been told details of the plan either. But he's one of the few who have met Marchionne. He's seen Fiat vehicles, and that's made him optimistic.

"(Marchionne) feels much better about Chrysler than he did about Fiat," when he took it over in 2004, Eddy says.

Eddy said Marchionne's reticence reminded him of former Chrysler CEO Lee Iacocca, who kept details close and made a big splash with product announcements.

"I think he wants to get the ‘Wow!’ factor back."

But it's been mostly woes for dealers. In early October, Chrysler temporarily closed some factories, due to parts shortages. There's also been problems with financing.

Phil Spady, who owns Chrysler-Dodge-Jeep dealerships in Columbus, Neb., and Yankton, S.D., said each dealership normally has 50 to 60 vehicles, but now their supplies are "in the teens."

Spady's supply of Calibers was quickly depleted by clunkers sales in July and August.

The automaker stopped building 2009 Calibers and won't ship 2010 models with improved interiors until November.

"We get fed last," Spady said of smaller dealerships.

Marchionne recently urged patience and said the company aims to reverse its sliding share of the U.S. market. September sales fell 42 percent and market shares has dropped to 8.3 percent from 11.1 percent, according to Autodata Corp.

Patience, like Calibers, is scarce.

"If I were running Chrysler corporation, I would have communicated with my dealers before now," said Wes Lutz, who runs a Dodge dealership in Jackson, Mich.