Chrysler's "Genesis" plan to slash Dealer Count

[XDCX]

It's been widely reported that Chrysler's "Genesis" plan will slash the size of its Dealer Network and reduce the number of product offerings from 30 to 15.

On a personal level I had two reactions:

The emotional side of me thinks it's sad - the company will never again be what it once was and a number of Dealers are probably going to get hurt.

The logical side of me knows that it's the right thing to do - the world has changed and Chrysler LLC has to adapt or die.

For those that have been around for awhile, the concept certainly isn't new. First it was "Project 2000" then "Project Alpha" and now "Project Genesis." I guess the real question will be how Cerberus chooses to execute its plan - the right way or the cheap way?

In my opinion, the right way is to get out the checkbook and encourage consolidation - take a page from GM's Playbook when they killed-off Oldsmobile.

The cheap way is just to keep cutting back on product until the single point dealers die. They could essentially be "starved" into consolidation.

Which approach will Cerberus take?

[SHACOS]

Being that Lithia gets about 40% of our revenue from Chrysler products, I'm interested to see how this will all lay out. I think the metro markets are in more danger of this consolidation, though.

[XDCX]

Originally Posted by SHACOS

Being that Lithia gets about 40% of our revenue from Chrysler products, I'm interested to see how this will all lay out. I think the metro markets are in more danger of this consolidation, though.

You're 100% correct about the targeting of Metro stores.

Chrysler LLC has indicated that the Project Genesis plan will target Metro stores with the goal of consolidating dealerships so the Chrysler, Jeep and Dodge brands all reside under the same roof. Rural dealerships are reported to be largely unaffected since 80% already have the preferred dealership structure.

Sadly, it doesn't appear that there will be any financial assistance from Chrysler LLC to facilitate the consolidation.

Additionally, it appears that dealers that do not consolidate will be faced with a limited product line as Chrysler LLC removes vehicles from its line-up. There has been some speculation that Chrysler will be the car franchise, Jeep the SUV franchise and Dodge the truck franchise.

The only way a dealer could have a full line-up would be to have all three brands under one roof.