Project Genesis Discussion

[XDCX]

Although Chrysler LLC's Management Team announced Project Genesis to their dealers last week there are still a number of unanswered questions.

Here are the Project Genesis Facts as I understand them:

Goal is to consolidate Metro stores so that all brands (Chrysler, Jeep, Dodge) are under one roof
Goal is to reduce Dealer Count in Metro Areas (Boston example: From 22 Dealerships to 8)
Goal is to have project complete in 4 - 5 years
Plan may include the use of Satellite Service Facilities
Rural stores are mostly not affected by the Genesis plan - 80% already have the CJD alignment
Chrysler LLC will offer minimal financial assistance to facilitate consolidationIt has been suggested, (although not this strongly) that single point stores that do not consolidate within the 4 - 5 year time period will starve as Chrysler LLC cuts vehicles from the line-up. Said another way, if you want to be a full-line dealership you had better have all the brands - otherwise you're just a niche dealer.

Initial reactions seem to indicate that Chrysler LLC will have a difficult job trying to consolidate the dealers without any financial assistance. Given the uncertainty with Chrysler LLC and Cerberus many dealers may be reluctant to "step-up" and buy out the neighboring dealerships.

Will Project Genesis work? Or is this just another version of Project 2000 and Project Alpha?

[XDCX]

I just read in Automotive News that most Chrysler Dealers are "OK" with the Project Genesis Consolidation Plan. :confused:

I don't want to be a skeptic, but I'm not sure that I buy that conclusion.

As I see it, Project Genesis is a "merge or die" ultimatum. Chrysler's Management has already indicated that they'll reduce the product mix to the point where a dealer will need all three brands to be a full-line dealer.

Further, Chrysler has indicated that there will be minimal financial assistance to facilitate the consolidation.

Given these facts, are you "OK" with Project Genesis?

[XDCX]

I received an e-mail the other day from a Dealer Principal that was deeply concerned about Project Genesis but didn't want to post his thoughts on a public forum. He didn't want to compromise his position with the Factory or other Dealers in his marketplace. I totally understand. :)

This site and this thread are not meant to be Anti-Factory. Chrysler, LLC has a tough job at hand and I agree that the dealer count needs to be reduced.

I guess my "tone" in this thread is more directed at Automotive News than it is at Chrysler, LLC. This is a gut-wrenching time to be a Chrysler Dealer - to suggest that the Dealers are "OK" with Project Genesis just struck me wrong.

On a final note, I want to make everyone aware of the Private Message System. If you find that there's a topic that's too sensitive to post in an public forum you can always send a Private Message to a member on this site. Private Messages can only be viewed by the sender and the recipient.

As this site evolves, my goal is to create a Hidden Forum that is accessible only to GMs and Dealer Principals where sensitive topics like Pay Plans, Audits, Buy/Sells, etc. can be discussed in a private "Members Only" setting.

[bruce350]

Chrysler has spent much of their time trying to prop up financially struggling dealers that because of market conditions, mismanagement, or a combination of these and other factors. It is obvious that you can only split a pie so many ways, so like the Mercury franchise we have had since 1981, what do we do with it now? Merging non full-line dealerships is practical, but the "new" private corporation called Chrysler must realize that families, egoes, and a considerable amount of money has went into creating and maintaining some of these franchises. We are in a rural area, so we really are not affected by this latest endeavor.

But who are they trying to convince with the new plan? I believe they are preaching to the choir. If they want them together-pay for it. Otherwise, the expense and burden is on the dealership, not Chrysler. We pay for the signs, the buildings, the training, the tools, the fixtures, the advertising, the matching SSI, the unemployment insurance, etc. Not Chrysler. They created this mess. Let them pay to clean it up.

[XDCX]

Chrysler has spent much of their time trying to prop up financially struggling dealers that because of market conditions, mismanagement, or a combination of these and other factors. It is obvious that you can only split a pie so many ways, so like the Mercury franchise we have had since 1981, what do we do with it now? Merging non full-line dealerships is practical, but the "new" private corporation called Chrysler must realize that families, egoes, and a considerable amount of money has went into creating and maintaining some of these franchises. We are in a rural area, so we really are not affected by this latest endeavor.

But who are they trying to convince with the new plan? I believe they are preaching to the choir. If they want them together-pay for it. Otherwise, the expense and burden is on the dealership, not Chrysler. We pay for the signs, the buildings, the training, the tools, the fixtures, the advertising, the matching SSI, the unemployment insurance, etc. Not Chrysler. They created this mess. Let them pay to clean it up.

Bruce350 - Great post and Welcome to the Forum. :)

I think Jim Press was quoted last week stating that Chrysler, LLC would love to write checks to facilitate the consolidation process, the only problem was that they would all bounce.

There was an article I read earlier this week that suggested that Chrysler, LLC could complete Project Genesis in short order if it was willing to buy-out select dealers using a formula like the one GM used for Oldsmobile.

The article figured that if Chrysler, LLC offered dealers $2,000/unit on their annualized sales that they could meet their consolidation targets. The downside is that a program like that would cost approximately $1.5 Billion - money that Chrysler doesn't have.

Final thought - your comment about egos and families is 100% dead-on. To a number of Dealer Principals their Dealership is part of their identity and their employees are like family. It's not going to be easy to make a decision to just walk away.

Thanks again for a great post. :)

[XDCX]

I think the one thing that really strikes me about Genesis is the severity of the cuts. In some markets Chrysler, LLC expects more than 50% of the dealerships to go away - that's a HUGE reduction. :(

One newspaper report indicated that the goal for the Detroit Area was to drop the dealer count from the current level of 44 dealers to just 19.

Here's a link to the newspaper report: http://www.freep.com/apps/pbcs.dll/article?AID=/20080212/BUSINESS01/802120316/1014

[XDCX]

I think one of the reasons that dealers are concerned about Genesis is because so much has changed at Chrysler in such a short period of time.

Just look at the events of the past couple of weeks.

The closing of the Pacifica Design Center
Chrysler's Summer Time ShutdownConcerning the Design Center, what surprised me was to learn that it's already been vacated. The building will be cleared out this weekend. That's super-fast by corporate standards - not like the old Chrysler.

Concerning the Summer Shut Down, it seems more desperate than innovative. I'm not opposed to new ideas, but forcing employees to alter their vacation plans so Chrysler can save a few bucks seems odd.

So how does this relate to Genesis? Who knows - maybe it doesn't?

All I know is that if I were a Chrysler dealer I would feel more comfortable if there were someone like a Tom Pappert at the helm. Given all of the recent changes at Chrysler, dealers can no longer predict what might happen next.

[SHACOS]

So does that mean that when you send a deal to Chrysler Financial for approval your going to get an out of office message? :) This "plan" doesn't make much sense to me. It seems like they will just piss off a lot of employees.

[XDCX]

So does that mean that when you send a deal to Chrysler Financial for approval your going to get an out of office message? :) This "plan" doesn't make much sense to me. It seems like they will just piss off a lot of employees.

I've read that they will have limited staff to handle Dealer/Customer concerns during the two week period and I doubt that CFC is included in the mandatory vacation program.

That said, the whole concept still strikes me as odd. :confused:

This company is in fiercly competitive market and it's losing share. I just don't get it - is Toyota taking two weeks off? Honda?

Let's face it, Genesis is not a new idea. We've seen it before as Project 2000 and Project Alpha. What makes it different, in my opinion, is that Chrysler is now less predictable and I doubt that makes the Dealer Principals feel more comfortable about the decisions they're going to need to make.

[XDCX]

I just read an article that interviewed an Indianapolis Dodge dealer about dealership consolidation. I believe that his dilemma is shared by hundreds of Chrysler, Jeep and Dodge dealers across the country.

The single point Dodge Dealership is a second generation family-owned store that has played a major role in supporting their community. The Dealer Principal owns the land and wants to buy the local Chrysler/Jeep store. Not surprisingly, the local Chrysler/Jeep store doesn't want to sell.

I get the impression that Chrysler, LLC thinks Project Genesis will be a simple spreadsheet presentation where each Dealer Principal evaluates their options and makes a decision. I don't think it's going to be that easy - it's not just about money.

For many Dealer Principals their dealership is not just their business, it's their identity. They enjoy the relationships that they have throughout their community and simply walking away is not an attractive option.

Here's a link to the news report: http://www.chron.com/disp/story.mpl/business/5621762.html

[XDCX]

An article in Automotive News indicates that Chrysler is reducing their facility requirements by about 12% in response to Project Genesis.

The theory is that a dealer will need less lot space and showroom square footage if the number of models are reduced. Given the high cost of real estate and construction the change makes good sense.

Dealers that have already made an investment in their facility based on the old standards may not be as enthusiastic about the changes.