Interesting Chrysler Buy-Sell in the Portland, OR area

[XDCX]

A newspaper report indicates that Ralph Martinez will be selling off his Chrysler, Jeep and Fiat Dealerships and he'll be closing his other CJDR dealership in a nearby location. Here's a link to the full report - click here

To be clear, I know Ralph Martinez and happen to think he's one of the smartest, most talented and hardest working dealers I've ever had the pleasure to meet. Mr. Martinez got his start in Chrysler's MID program and grew his fortunes from there.

That said, I still think the Chrysler portion of the recent Buy-Sell is interesting for the following reasons:

-- Why would a dealer with a CJDR franchise in a metro market simply close his store? Given the current strength of the auto market and Chrysler's string of impressive sales results, the store would have to have some Blue Sky value?

-- Why would Auburn Hills allow a Chrysler-Jeep dealer to sell his franchise to another dealer when they have not completed Project Alpha in that market? Ron Tonkin Dodge is a nearby stand-alone Dodge dealer and Town and Country is limited to Chrysler-Jeep. Why didn't Chrysler exercise their right of first refusal to complete Project Alpha and give Ron Tonkin the Chrysler-Jeep franchies? Is Project Alpha no longer important?

-- Concerning Fiat, I'm not sure if it was a stand-alone facility or not but it will be interesting to see if Chrysler allows the new dealer to blend Fiat into his CJ franchise in light of Fiat's limited product offerings and poor sales results.

Call me a skeptic, but I think there was some horse-trading in this deal and I'm betting that Auburn Hills made some exceptions with this Buy-Sell that they don't typically make in other markets or for other dealers.

[79LilRedExpress]

Originally Posted by XDCX

A newspaper report indicates that Ralph Martinez will be selling off his Chrysler, Jeep and Fiat Dealerships and he'll be closing his other CJDR dealership in a nearby location. Here's a link to the full report - click here

To be clear, I know Ralph Martinez and happen to think he's one of the smartest, most talented and hardest working dealers I've ever had the pleasure to meet. Mr. Martinez got his start in Chrysler's MID program and grew his fortunes from there.

That said, I still think the Chrysler portion of the recent Buy-Sell is interesting for the following reasons:

-- Why would a dealer with a CJDR franchise in a metro market simply close his store? Given the current strength of the auto market and Chrysler's string of impressive sales results, the store would have to have some Blue Sky value?

-- Why would Auburn Hills allow a Chrysler-Jeep dealer to sell his franchise to another dealer when they have not completed Project Alpha in that market? Ron Tonkin Dodge is a nearby stand-alone Dodge dealer and Town and Country is limited to Chrysler-Jeep. Why didn't Chrysler exercise their right of first refusal to complete Project Alpha and give Ron Tonkin the Chrysler-Jeep franchies? Is Project Alpha no longer important?

-- Concerning Fiat, I'm not sure if it was a stand-alone facility or not but it will be interesting to see if Chrysler allows the new dealer to blend Fiat into his CJ franchise in light of Fiat's limited product offerings and poor sales results.

Call me a skeptic, but I think there was some horse-trading in this deal and I'm betting that Auburn Hills made some exceptions with this Buy-Sell that they don't typically make in other markets or for other dealers.

Maybe it is going to be the first "CJF" store and they will be gifted RAM if Dodge does indeed go away

[XDCX]

Originally Posted by 79LilRedExpress

Maybe it is going to be the first "CJF" store and they will be gifted RAM if Dodge does indeed go away

Interesting thought, but Ron Tonkin has the Dodge (and RAM) franchise that's only about a mile away.

Concerning Dodge, I continue to believe that it's Marchionne's plan to kill the brand but the delay in bring Alfa Romeo to market has postponed his plans and that's why there are so many conflicting signals coming from Auburn Hills concerning Dodge.

[steve_biegler]

A quick look at websites shows 16850 SE McLaughlin for the Fiat store and 16800 SE McLaughlin for the CJ dealership. My guess a stand alone showroom maybe? They share used inventory, both at a 224 count.

[steve_biegler]

Any chance that Chrysler is paying him for the store he is closing? Not sure about the population or how close any other CDJRF stores are. Does Oregon have state requirements for how far dealerships have to be appart?

[steve_biegler]

If I recall correctly, Tonkin was NADA president during the dealership thefts and I think that had lots to do with the NON-EVENT between his store and Town and Country back in May of '09.

[XDCX]

Originally Posted by steve_biegler

If I recall correctly, Tonkin was NADA president during the dealership thefts and I think that had lots to do with the NON-EVENT between his store and Town and Country back in May of '09.

You sir, are 100% correct.

As I recall, Ed Tonkin was next in line to be President of the NADA and a lot of us on the forum wondered why Auburn Hills would allow a stand-alone Dodge and a stand-alone Chrysler/Jeep store to make it to NEWCO when they killed off Timberline CJDR in the same metro market.

Corporate politics played a major role in the Chrysler OLDCO terminations and it appears corporate politics may still be alive today.

[Lakeshow]

I'd bet they wanted less dealers(if you can imagine). So go ahead and shutdown this store Mr. Martinez, and we'll gladly approve the buyer on this store. If not, we'll just starve you out until attrition takes it's toll on both.

[XDCX]

Originally Posted by steve_biegler

Any chance that Chrysler is paying him for the store he is closing? Not sure about the population or how close any other CDJRF stores are. Does Oregon have state requirements for how far dealerships have to be appart?

Originally Posted by Lakeshow

I'd bet they wanted less dealers(if you can imagine). So go ahead and shutdown this store Mr. Martinez, and we'll gladly approve the buyer on this store. If not, we'll just starve you out until attrition takes it's toll on both.

I was thinking the exact same thing but I wanted to do some digging to see if that was the real reason.

Word on the street is Chrysler wanted Mr. Martinez to build a new facility for his CJDR Dealership in Wilsonville and they gave him a deadline when the new facility needed to be constructed. Mr. Martinez had a suitable site but decided not to build a new CJDR store because the land may be more valuable than the franchises.

Apparently land for dealerships is in short supply in Wilsonville and Mr. Martinez has the only land available for a car dealership that has the correct zoning.

For those of you who are thinking that re-zoning is a relatively easy task, remember that Oregon is one of a handful of states that doesn't have a sales tax. That means there's ZERO financial incentive for a city to accomodate a car dealership.

Ironically, in Chrysler's quest to have Mr. Martinez build them a new facility in Wilsonville it's possible they lost a point that will be difficult, if not impossible, to refill.

Granted, it's possible that Mr. Martinez may sell his land in Wilsonville to a dealer who's interested in building a new CJDR dealership but it's just as likely there's some other OEM that's looking for representation in that market that's willing to pay more money.

[XDCX]

While I can now understand why Mr. Martinez chose to close his CJDR dealership in Wilsonville, I still don't have a clear answer why Auburn Hills let a stand-alone CJ dealership be sold when there's a stand-alone Dodge/RAM store only a mile or two away?

Word on the street is that Auburn Hills played a role in getting the buyer and seller together so perhaps that played a role.

I wonder what role, if any, Ron Tonkin's store played in the negotiations? If Chrysler decided to excercise their right of first refusal and had to match the Blue Sky value negotiated in the original deal would they then ask Ron Tonkin to contribute to the deal or would they give him the C/J franchises for free?

Bottom line, my bet is Project Alpha is off the radar screen at Auburn Hills and is no longer that big of a deal.

[ohiobuckeyes]

Originally Posted by XDCX

Bottom line, my bet is Project Alpha is off the radar screen at Auburn Hills and is no longer that big of a deal.

In the S1 Filing Fiat/Chrysler Group Stated this...

88% of US Dealers make a profit. Could this store be one of the 12% that are losing money?

91% of US Dealers are CDJR stores, the other 9% are in the single point stores.

Chrysler also stated that "We are currently working to strengthen the network by closing gaps in geographical coverage, solidifying dealer financials and profitability, modernizing sales and service facilities, and increasing diversity, all of which we believe will increase per-dealer sales." Project Alpha is still going strong in NA.

Since June 30, 2013 dealers have invested or committed to invest over $650 million into our dealerships.

[XDCX]

Originally Posted by ohiobuckeyes

In the S1 Filing Fiat/Chrysler Group Stated this...

88% of US Dealers make a profit. Could this store be one of the 12% that are losing money?

91% of US Dealers are CDJR stores, the other 9% are in the single point stores.

Chrysler also stated that "We are currently working to strengthen the network by closing gaps in geographical coverage, solidifying dealer financials and profitability, modernizing sales and service facilities, and increasing diversity, all of which we believe will increase per-dealer sales." Project Alpha is still going strong in NA.

Since June 30, 2013 dealers have invested or committed to invest over $650 million into our dealerships.

Ohio - Great information - thanks for sharing.

Concerning the CJDR store that Mr. Martinez closed in Wilsonville, my bet is it was in the 88% camp with the profitable stores. Mr. Martinez runs solid operations and I think the reason for the closure is based on Chrysler's demands for a new facility and the dealer's decision that it's likely more profitable to drop the CJDR franchises and sell the land to another OEM that's looking for representation.

Concerning the statistic that 91% of the network is already combined with CJDR under one roof - that's an interesting stat.

Concerning Project Alpha being alive and well, I can only comment on what I see and I've noticed that Auburn Hills passed on the opportunity detailed in this thread and I know the C/J and Dodge stores in Peoria, AZ are still septate. That said, 91% CJDR consolidation shows that the majority of the work that Auburn Hills needs to do is already done.

[Moshe @ Performance Brokerage Services]

Originally Posted by XDCX

Word on the street is Chrysler wanted Mr. Martinez to build a new facility for his CJDR Dealership in Wilsonville and they gave him a deadline when the new facility needed to be constructed. Mr. Martinez had a suitable site but decided not to build a new CJDR store because the land may be more valuable than the franchise

The CDJR open point (after Martinez shut it down) was awarded to Findlay Auto Group.

[XDCX]

Originally Posted by Moshe @ Performance Brokerage Services

The CDJR open point (after Martinez shut it down) was awarded to Findlay Auto Group.

Moshe,

Thanks for the information - that's very interesting.

I always think of the Findlay Auto Group as being a Southwest dealer group but it appears they're expanding into new markets.