Incentives planned for dealers to boost sales

1/31/2001

Chrysler, Dodge, and Jeep dealers can earn up to three times as much in bonuses from DaimlerChrysler AG if they exceed “reasonable” targets to help the automaker increase sales - but in return they'll have to give up some payments for gasoline, advertising, and other expenses.

By Monday, the 4,410 dealerships in the automaker's U.S. unit's franchise ranks will be notified of the monthly targets for their stores in a new program to increase sales and cut costs.

Dealers meeting 75 percent or less of their targets will receive nothing, but those reaching 76 to 99 percent will get $150 for every vehicle sold; 100 to 109 percent, $250; and 110 percent or more, $500. Before the change announced this week, dealers received bonuses based on vehicles ordered, not sold.

The change is part of the financially troubled Chrysler unit's plan to recoup market share and other losses nationwide. The Chrysler unit lost 1 percent of U.S. market share last year and is expected to tally nearly $2 billion in losses from the last six months of 2000.

“It's an incentive for dealers,” DaimlerChrysler spokesman Jay Cooney said yesterday. “The bottom line is, we're going after market share, we're going to increase our revenues, and we think the dealers can help us.”

Said Jim Smith, general manager of Al Smith Chrysler Plymouth Dodge in Bowling Green: “Obviously, the only way that Chrysler is going to pull themselves up is they're going to have to sell their way out of the problem.”

To fund the program and cut costs, the Chrysler unit is making dealers pay for filling gas tanks in new vehicles and reducing from 1.4 hours to 0.9 hour the paid time to get new cars and light trucks showroom-ready. Plus, the Chrysler unit is decreasing profit margins on vehicle options by 3 percent, cutting local-advertising reimbursements for dealer associations by $50 a vehicle, and eliminating an allowance fund for technology-related purchases.

Sylvania Township's Yark Automotive Group, which sells Jeeps, is awaiting more information about the program, said Michelle Thomas, the multibrand dealership's marketing director.

“The dealership as a whole is going to take kind of `wait-and-see' stance,” she said. “I think we're optimistic.”

Al Smith Chrysler Plymouth Dodge and other dealerships will adjust, Mr. Smith said.

“You have to deal with what they give you,” he said. “We'll get by. We always do.”

The dealerships' sales targets will have to be reasonable to encourage increased selling, the automaker's Mr. Cooney said.

“If you are moving four minivans a month, there's no sense in setting your monthly objective for minivans at 40,” he said. “That's not going to get you to reorder minivans.”

The Chrysler unit Monday announced it is cutting 26,000 jobs, or 20 percent of its workforce, by stopping or scaling back production at several plants. The dealership announcement that followed is part of the Chrysler unit's overall recovery plan, Mr. Cooney said. “In the current business environment, I think that when you announce that you're laying off 26,000, they dealers realize they're part of the recovery program,” he said.