I will never claim its fair

Chrysler pulled the plug on almost 800 dealers last week. This was announced about a month ago, but it was finalized last week.

I'm not going to say its fair. It was harsh, sometimes arbitrary, and pretty awful.

I work in parts and our business has gone up about two fold since two other dealers in the area shut down. Its good for us, but I'm not happy about how its happened.

However, it has happened, and let me answer the question that none of the personal interest stories are answering. They are all asking it, but none are answering it.

Why? How is this saving Chrysler money?

Because with less dealers Chrysler doesn't have to make as many cars. Chrysler has been making too many cars for years now and had to sell too many at a loss to clean out last year's inventory. The offered incentives were always so much. Here, let me illustrate it.

Say, for simplicities sake lets say there are 100 dealers. We'll simplify an average of where each dealer sells 1 car a month. 12 cars a year = 1200 cars.

The problem is, many dealers weren't selling 1 car a month. Sure, you had some selling 5, 10 cars a month. But you had a lot selling 1 car every 2 or 3 months. However, Chrysler still had to make cars based on the average (to show a profit) sales of 1 car a month. So, all these extra vehicles are sitting around collecting dust until a dealer needs them.

Also, not every vehicle is as profitable. Trucks/SUVs are WAY more profitable than cars. So if a dealer is selling 1/month most months, but its a car every time rather than a truck, that's honestly not helping Chrysler that much right now.

This is a simplified illustration, but this is WHY Chrysler is doing it. Also, too many dealerships means your dealers are competing with each other to sell the same product. Chrysler doesn't want 2 dealers trying to sell 1 person a car. They want 1 dealer to sell them that car. There are only X amount of people out there that are going to buy a Chrysler. Many areas were completely over saturated with dealerships who competed against other Chrysler dealers as much as they did against other manufacturers.

Like I said, this isn't a good situation. Its sad, and the fallout is bad. However, don't believe for a second all the sob stories where some poor guy is asking "I buy cars from them how is it saving them money?" It is. Trust me.

Oh, and I recently saw a figure where they showed the average wage at dealerships is between 45-55k a year. Just remember, those are national averages and wages in the big cities are WAY different than those elsewhere. I bet we maybe have 1/3 of our people at more than 45k a year.

Ah well. I just felt compelled to write this as "news" outlets are failing us again.