Dugald McConnell writing on CNN.com has issued an article titled “Dealership has less than a week to sell all its cars” that tells the story of Pohanka Chrysler-Dodge that has less than a week to sell its remaining new cars.
Ray O’Bryhim has been running an ad that reaches out saying “Everything must go, regardless of profit!”
June 9th, 2009 marked the termination of his franchise contract to sell new Chryslers and Dodges.
O’Bryhim is part of an unlucky group of 800 Chrysler/Dodge/Jeep dealers nationwide who have been trimmed for the automaker’s new future plans.
New cars cannot be sold legally by O’Bryhim after June 9th.
One problem for dealers like O’Bryhim is if they miss the deadline they have no recourse because Chrysler is protected under the bankruptcy law.
The cars are being drastically discounted by dealerships to move them.
What kinds of discounts are we talking about?
O’Bryhim just sold a new Nitro. The Manufacturers Suggested Retail Price (MSRP) was $29,170 but with the 40% discount granted the car was sold for $17,510.
In the midst of this “hurry-up offense,” O’Bryhim’s salespeople have sold 80 vehicles in 19 days.
No doubt the closer they get to the deadline, the deeper the cuts will go.
Another concern of the dealerships is trying to maintain jobs for their car salespeople and administrative personnel.
What I was wondering as I was writing this article was why dealers wouldn’t consider making an offer to dealers who are going to be allowed to stay in business.
Finally that idea was mentioned but it was in the context that Chrysler was supposed to help the “short-term” dealers find outlets with other dealers.
Of course they haven’t done what they said they would because their hands have been full with their own problems and trying to make the government happy.
Since the dealers who are not under the gun can take as long as they want to sell cars, why couldn’t they take inventory on a reduced price that was very small because they have time to move the inventory? Further the cars could be even left on consignment so that no one would be locked into a price until the car sold and for that matter some of the salespeople from the crippled dealerships could reinforce the stable businesses in a collective way to hit the marketplace.
I know a guy who has made a living on “going out of business sales.” That can be a methodology to make a profit.
I would think that the dealership could move to another line of car or could move to used cars.
Perhaps I am being unrealistic but it seems that there are opportunities even in a situation like this.