Michigan Transmissions Shops

Michigan Transmissions Shops

Chrysler Dealers Still Hoping for the Automaker's Survival

The same day that American billionaire and investor Kirk Kerkorian offered a bid of $4.5 billion for Chrysler Corp., is the time that a car salesman in Southold, New York was also dusting off a framed print.

Chrysler dealer Dick Mullen said last April 5 while smiling at an editorial cartoon from the 80s, “Time to hang this up again. It shows a car bursting from the ground beneath a gravestone marked ``Chrysler: R.I.P.''

Mullen’s shop has stayed on Long Island’s northeast corner for 80 years and has witness to the rise and fall of Chrysler through decades of miscues. Way back in the 80s the good old Mullen has loaned Chrysler some $10,000 when it was nearing bankruptcy. And today Chrysler’s future is again on the brink as its German parent DaimlerChrysler AG is opening all options for its sale. Despite the somewhat bleak future that Chrysler is facing today, Mullen remained calm and unafraid leavening the wait gallows humor.

According to Mullen, 70 when he told sales Chief Steve Landry at New York Auto Show last April 4, "It's the fourth time I'm going out of business with you guys, I'm getting a little tired of it." He also suggested for Chrysler to write a book based partly on his up-and-down ride and pass it out to future executives.

Landry said as a way of confirming his conversation with Mullen, "Most of our dealers have faith, and they know that whatever happens, our brands and products are not going anywhere." He also said that he plans of meeting with as many as 50dealers this year to answer questions and to mend relationships.

Surveying the business of Mullen and the rest of his fellow car dealers on Long Island, it’s hard to miss the obvious fact that the Japanese carmakers influence has also reached Long Island.

The Union

Chrysler maker of Dodge truck parts and Dodge truck accessories has been a one of the ‘Big Three’ US automaker alongside General Motors Corp. and Ford Motor Co. way back in 1929. Unfortunately out of the ‘Big Three” it’s only GM that has successfully maintained its post.

The wrong decisions that have been plaguing Chrysler started back in 1970s when the Auburn Hills, Michigan-based automaker try to push gas guzzlers as oil buying habits were changing. Chairman Lee Iacocca was able to avoid bankruptcy when it acquired $1.5 billion government-guaranteed loans. After a revival behind the compact K-car and the minivan, the US automaker once again embarked in 1998 on a rocky $36 billion union with Daimler, the maker of Mercedes-Benz.

The union only plunged Chrysler to graver financial crises that went on for more years than anyone can remember. Chrysler has obtained a $1.5 billion loss which prompted its German parent to investigate a sale. It was also then that Chrysler has surrendered the No.3 slot in the US market share to Toyota Motor Corp. Jeeps, Dodge trucks, and minivans have accounted for 70 percent of Chrysler’s sales at the time when gasoline cost nearly $3 a gallon in the US.

The Struggle of Chrysler Dealerships

Mullen for his long years of selling Chrysler products have weathered out very storm. He and his father each bought $10,000 of Chrysler’s debentures in 1980 that earns them 11 percent interest per year interest. It was also their Chrysler dealership that was the first to sell Jeep in the US after the company bought American Motors in 1987. Mullen has met Iacocca twice and later he was invited along a handful of dealers at a lunch at New York’s Waldorf Astoria hotel.

The main purpose of Daimler for purchasing Chrysler is to gain mass-market American foothold. Unfortunately instead of the gain it is expecting it has found itself struggling because of price discounts and union retiree costs that add $1,300 to the price of each car. And today with oil prices surging high some investors see the future of Chrysler as becoming bleaker than before.

According to Tim Gilbert, who helps manage $10 billion in assets including DaimlerChrysler bonds at principal Global Investors in Des Moines, Iowa, "When the product cycle turned, the ugly really outweighed the good." He also said that he firm is adding more bonds of the Stuttgart Germany-based carmaker because it should be more stable if it sells Chrysler.

DaimlerChrysler shares on the New York Stock Exchange have jumped 25 percent to $80.69 since the company has announced last February 14 of its plans of getting rid of its money-losing arm Chrysler.

Overproduction is the Problem

Mullen says that Eaton was smart to sell when Chrysler was riding high. But he was less happy last year, when Chrysler’s production outstripped demand. Mullen and the other dealers were left with unwanted vehicles. This has provided Mullen with the idea for his book which he has given the theme: ‘Overproduction causes problems.’

Landry also said that he is aware that dealers were upset and that is why he’s meeting with many of them this year. The most perplexing thing that Mullen found on the potential sale is that Chrysler cars have never been better. As a matter of fact the Crossfire sports car shares 40 percent of its parts with Mercedes including the engine. The Chrysler 300 on the other hand makes use of the same axles and transmission as the Mercedes E-Class sedan.

Chrysler is also narrowing the quality gap with Toyota just last year the average new Chrysler had 12 percent more problems than a typical Toyota basing on the results found by researcher J.D. Power & Associates in Westlake Village, California. But despite such that average is much better than the average industry gap of 15 percent and far better than the 22 percent that Chrysler incurred in 2000.

About the Author

Gertrude Sayzer finished her degree in Marketing at Western New England College. She is passionate about writing and loves to travel as well. At present, this 32 year-old mother of three works full-time at an Ad agency in Boston.