Chrysler Dealers Asked To Accept Cost Cuts, Order Vehicles
25 Januar 2009 - 10:22PM
Dow Jones News
Chrysler LLC is asking dealers to accept cost cuts and resist
the urge to slash orders for new vehicles as the company races to
meet a March 31 deadline to prove to the government it can become
viable.
Dealers are being asked to accept a .5% reduction in profit
margins on vehicle sales and give up an annual increase in the
amount they are reimbursed for labor to perform warranty repairs.
Chrysler also will stop paying for dealers to fill up gas tanks of
cars and trucks before they're sold.
"Dealers understand the need for all parties to put some skin in
the game," Chrysler Vice Chairman Jim Press said Sunday, after
meeting with dealers at the National Automobile Dealers Association
underway in New Orleans. "They realize they can all help us save
some money."
Press told dealers the company needs them to keep their
inventories at roughly the same levels they were at toward the end
of last year, even though sales are expected to slump further this
year.
"They told us 'you need to guarantee the viability of this
corporation and order some more product,' " said Wesley Lutz, owner
of Extreme Dodge/Hyundai Inc. in Jackson, Mich.
Lutz, saddled with excess supply of new cars and trucks, said
Press' comments convinced him to order more vehicles, though he
initially planned to hold off.
"They put together a very compelling case," he said. Chrysler
and General Motors Corp. (GM), surviving on $13.4 billion in
federal loans, have until March 31 to deliver plans to become
viable without government support.
The loan deal requires concessions from labor unions and debt
holders intended to reduce the auto makers' debt and get its labor
cost structure in line with foreign-based rivals that operate in
the U.S.
Press said the sacrifices being asked of dealers are intended to
ensure all parties pitch in to help the company survive.
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532;
sharon.terlep@dowjones.com
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