Chrysler to operate Factory Owned Dealership in Los Angeles

[XDCX]

A report in the Los Angeles Downtown News indicates Chrysler has plans to open a new factory-operated dealership in Los Angeles early next year. For the full report - click here

In a classic case of "do as we say, not as we do" Chrysler's going to operate the dealership as a full-line Chrysler, Jeep, Dodge, Ram and Fiat store. I guess the requirement for a separate Fiat facility doesn't apply when Auburn Hills is writing the rent check.

While my first thought was the store was going to be part of Chrysler's Minority Dealer program, it appears the store will be operated as "flagship" for the West Coast and run by Chrysler. Apparently Marchionne isn't familiar with Ford and GM's track-record when they entered the retail arena.

[possum]

Setting a precedent.........be watchful.

[The StraightShooter]

Maybe its me but this speaks volumes about the state of the things.

[XDCX]

Here's the question - Who the hell would want to own a three story Chrysler dealership with a HUGE rent factor in the heart of Downtown Los Angeles?

Here's the answer - No one. According to the newspaper reports this store's been mothballed since the original dealer pulled out of the deal back in 2004.

Here's the bigger question - Why didn't Chrysler ditch this White Elephant when they went through bankruptcy last year?

Here's my speculation - Either Chrysler owns the real estate outright so there wouldn't be a benefit to ditching it in bankruptcy, or Chrysler Financial holds the mortgage and Cerberus didn't want to take the hit.

[XDCX]

Here's a picture of Chrysler's three story dealership in downtown Los Angeles thanks to Google Streetview:

[XDCX]

I wonder if Morpace is going to whack Auburn Hills for having a "non-conforming arch" on their Dealer Standards report?

[Lakeshow]

The more I read these types of posts...the better I feel about being franchise free. Le'ts face it, they'd all be factory run stores if it was up to them.

[XDCX]

I did some digging based on the street address that was carved under the arch and determined the property at 2025 S Figueroa Street in Los Angeles, CA sold for over $27 Million on 06/11/09. The sale date suggests it was an asset impacted by Chrysler's bankruptcy.

I was also curious what the property taxes would be on a $27 Million building - a few clicks later I discovered the property tax for the above address is a little over $360,000 per year.

Assuming a 30 year mortgage at 5%, that means the average dealer would face monthly expense of $145K just to service the mortgage. Add in another $30K per month for property taxes and you have a monthly rent factor of $175K before you pay for any insurance or utilities.

It would be one thing to spend $27 Million for a 20+ acre dealership that was capable so selling 200 - 300 cars per month, but this is nothing more than a fancy facade on a sixty year old building. Additionally, while I'm not too familiar with Los Angeles I'm pretty sure Chrysler's new facility is in a rough section of town. It's only blocks away from the USC campus and I remember reading that USC has a very aggressive program to keep their campus safe but warns students about venturing off-campus at night.

To be clear, I'm a Capitalist and it's Chrysler's money and they're entitled to do whatever they want with it. I'm just bothered that I learn about Chrysler's plans to enter the retail arena in California the same week I learn that two of their private capital stores are being forced to close due to poor business conditions.

[XDCX]

Here's the screen image from the L.A. County Assessor's website showing the $27,650,276 selling price for the property at 2025 S Figueroa Street on 06/11/09:

[ohiobuckeyes]

Originally Posted by XDCX

I'm pretty sure Chrysler's new facility is in a rough section of town. It's only blocks away from the USC campus and I remember reading that USC has a very aggressive program to keep their campus safe but warns students about venturing off-campus at night.

It does not "look" like a bad part of town with the Volvo and Porsche, Audi, and Volkswagen dealership down the street.

Also with the 101 in the buildings foreground Chrysler would say it is an great location with Highway/Interstate location. Cause you know that is going to be the "Dealers" LOI.

[XDCX]

Originally Posted by ohiobuckeyes

It does not "look" like a bad part of town with the Volvo and Porsche, Audi, and Volkswagen dealership down the street.

That's a good point. I used Google's Streetview and checked out Felix Chevrolet which is just a few blocks away. They had an outdoor display lot without any fences or barriers so my concerns about the neighborhood may be unfounded.

Originally Posted by ohiobuckeyes

Also with the 101 in the buildings foreground Chrysler would say it is an great location with Highway/Interstate location. Cause you know that is going to be the "Dealers" LOI.

You can't get too much closer to a major freeway, that's for sure. I wonder if Chrysler will be able to put brand signs up that will catch the attention of the drivers on the 110 Freeway?

[steve_biegler]

http://www.autonews.com/apps/pbcs.dl...101119919/1403
Auto news article.

[steve_biegler]

Chrysler-Dodge-Jeep-Ram AND FIAT! I guess whats good for the goose isn't whats good for the gander!

[LJS]

All I can say is...................

[XDCX]

Originally Posted by steve_biegler

http://www.autonews.com/apps/pbcs.dl...101119919/1403
Auto news article.

I just read the article.

I thought it was interesting Chrysler stated LaBrea Chrysler Jeep has been a factory owned dealership for about the past five years. As I recall the dealership has been a Minority Dealer store for over a decade. In fact, I'm pretty sure Chrysler assigned a new GM to the dealership about a year ago when they closed Long Beach Chrysler/Jeep - another MI store.

As before, it's Chrysler's money and they can spend it however they want. My only frustration is I doubt they would have approved a Fiat Franchise in an existing CJDR facility if it were a private capital dealer.