Plan targets one-brand dealers

Plan targets one-brand dealers

Detroit automakers are reducing dealerships as market share falls.

DETROIT (AP) — For years, the Warren Central High School Warriors have counted on Gene Beltz’s Shadeland Dodge for support.

From buying ad space in programs to paying for schedule printing to sponsoring a mentorship program, the dealership has been there to support athletics and academics at the football powerhouse on Indianapolis’ east side.

But the new owners of Chrysler LLC want to jettison hundreds of single-brand dealers such as Shadeland, consolidating them into larger operations that sell all three company brands, Chrysler, Dodge and Jeep.

The plan, similar to those under way at Ford Motor Co. and General Motors Corp., could mean an exit from the business for Shadeland and other longtime dealerships that have long been part of the American landscape.

“I’m kind of a dinosaur,” says owner Kevin Beltz, whose father started the business in 1970 when the area was a bustling hub of factories.

Beltz doesn’t want to sell. He’d rather buy the Chrysler-Jeep dealership down Shadeland Avenue, but he knows that dealer would like to buy him.

“When you’re a family-owned store and you own your own property and this is your livelihood, what are you going to do?” he asks.

Chrysler now has roughly 3,600 dealer sites nationwide, many close together and fighting for the same customers. Merging them could leave nicer and better staffed franchises which would be more profitable. There still will be plenty of competition between dealers, from other automakers, and on the Internet, say companies and industry experts.

There’s been talk about cutting the number dealers in half, but Chrysler won’t say if it has a target in mind.

Detroit automakers built their dealer networks when they had a far larger share of the U.S. market. In 1984 the Detroit Three sold 77.4 percent of all cars and trucks in the U.S., but that dropped to just 51.1 percent last year, according to Autodata Corp.

During that time, the dealer network contracted only a little, so stores began to scrap with nearby dealers selling their own brands — especially those in cities and interior suburbs.

“We’re just over-dealered,” said longtime Detroit-area dealer Hoot McInerney, whose Dodge-only shop will be merged into his nearby Chrysler-Jeep dealership.

Steven Landry, Chrysler executive vice president of North American sales, said Chrysler dealers are generally seven to nine miles apart in metro areas, too close to be profitable.

Chrysler has said small, rural dealers won’t be targeted. Most carry all three brands, have high customer satisfaction and are community pillars, said Gary Dilts, a former Chrysler sales executive who now heads J.D. Power & Associates’ automotive group.

“They’re really trying to stop this internecine warfare among metropolitan dealers five, 10 miles apart,” said Sheldon Sandler, managing director of Bel Air Partners, a Princeton, N.J., firm that helps car dealers find options when they want out of the business.

Toyota Motor Corp., for example, had about 1,400 U.S. dealerships last year, about 40 percent of the combined number selling Chryslers, Dodges and Jeeps.

Toyota dealers each sold an average of 1,766 vehicles last year, while the average Dodge dealer sold only 374, according to J.D. Power and the trade publication Automotive News.

Because of declining market share, many Detroit Three dealers are losing money. Last year, 28.6 percent of Chrysler, Ford and GM dealers broke even or lost money, according to the National Automobile Dealers Association. The compares with only 14.5 percent of foreign-car dealers.