Yesterday Chrysler announced it will close 789 of its 3,181 dealers across the country. The Washington Post says that Chrysler is doing this to "improve their business and image."
One dealer falling victim to these cuts hopes the move will actually worsen the company's bleeding and further tarnish its public image.
Via Fark, there's this report from the Oregonian:
Dealers across the state were angered. "I hope the American public looks at this and says we aren't buying anything made by Chrysler because they didn't treat the dealers right," said Nancy Hamilton, who five years ago inherited Dave Hamilton Motors in Redmond from her husband. "The dealers have been their bread and butter for years. For them to throw us under the bus is wrong."
Megan McArdle gives us some reasons why the franchises cost Chrysler a lot of money:
* Inventory: Chrysler often has to take back unsold inventory. A lot of dealers selling a little inventory is costly, because you have to ship a minimum number of cars to each dealer
* Financing: Chrysler helps many dealers float their purchases (though to be fair, those dealers also tap their own credit for things like advertising, expanding the company's effective spending)
* Brand costs: Shabby, run-down dealerships don't improve the image of the firm, and if they are the only game in town, drive users to other cars.
But as the dealer points out, these massive cuts could make Chrysler even more unappetizing to the average consumer. It would seem the costs from unsold inventory, among other expenses, are high enough for Chrysler to overlook this public-image problem.