Automotive News - February 18, 2008 - (Page 4)

4 • FEBRUARY 18, 2008 news ANALYSIS For Chrysler, double dilemmas ■ The products Chrysler’s choices Chrysler LLC product planners looking to trim overlapping vehicles face tough decisions in these segments. What would lineup be with brands under single roof? Bradford Wernle bwernle@crain.com Mercedes will pay $9.5 million to settle suit Diana T. Kurylko dkurylko@crain.com Large cars SUVs Chrysler 300 Dodge Charger Chrysler Aspen SAN FRANCISCO — Chrysler LLC’s plan to prune its vehicle lineup is taking shape. The automaker wants most dealers to sell its Chrysler, Dodge and Jeep brands under one roof, and that means eliminating redundant vehicles. But Chrysler co-President Jim Press has said the automaker will do more than just cut duplicate models. It will add others in segments Chrysler doesn’t cover now. Some of those vehicles could be sourced from other manufacturers. Press says Chrysler is talking with potential partners about product alliances, but he won’t name names. If the lineup were pruned today, Chrysler would face some nail-biting choices. Here’s a segment-by-segment analysis: Mid-sized cars Chrysler Sebring Dodge Avenger Dodge Durango Minivans Subcompact A China-made subcompact from Chery is in Chrysler’s future. It’s just a matter of bringing the car up to the standards North American customers expect. Chrysler Town & Country Dodge Grand Caravan Jeep Grand Cherokee New nameplates? Jim Press says Chrysler will add vehicles in some segments it doesn’t cover now. Crossovers Small cars/compact SUVs Chrysler currently sells three small vehicles, all made at the company’s Belvidere, Ill., factory: the Dodge Caliber, Jeep Compass and Jeep Patriot. Look for Chrysler to dump the Compass and keep the Caliber, the hottest seller of the three. The Patriot will be on the fence. Dodge Nitro Jeep Liberty Large cars Here’s where the going could get tough. If Chrysler keeps only the 300 full-sized sedan and drops the Dodge Charger, the decision would provoke howls of protest from Dodge dealers. That’s because the Charger had more sales than the 300 in January, though it was a close race. If Chrysler is serious about eliminating redundant vehicles, it will have to drop one of these two cars, just as it already dropped the Magnum station wagon, which is built on the same LX platform. “I hope they’re not thinking that if they get rid of the Charger, all sales will go to the 300,” says John Wolkonowicz, analyst for Global Insight in Lexington, Mass. “They will be lucky to get 20 to 25 percent.” That kind of math could force Chrysler to make an exception and keep both big sedans, which have radically different sheet metal, he says. ■ The dealers Family-owned stores could be tough sell for consolidation Bradford Wernle bwernle@crain.com Chrysler’s plan Project Genesis Increases pressure to merge into three-brand stores Sends teams to dealers to advise on mergers Will kill overlapping vehicles last week at the National Automobile Dealers Association convention, the plan faces a series of hurdles if it is to succeed where its predecessor, Project Alpha, only partially worked. It’s going to be particularly tricky to get small, family-owned stores such as Monarch Dodge to merge — a challenge that slowed Project Alpha. Chrysler is urging dealers to merge so most stores can sell all three brands. Under Genesis, the product lineup will be tailored to dealerships that carry all three. Potentially, that Mid-sized cars In the mid-sized sedan segment, the oft-criticized Chrysler Sebring competes with the Dodge Avenger. If one of these cars disappears, it see PRODUCTS, Page 66 SAN FRANCISCO — Mark Hodos’ family has been selling cars for more than 50 years, but he’s not sure the family business will last another halfcentury. Hodos’ Monarch Dodge is a standalone store in Lauderdale Lakes, Fla., that sells about 600 new cars a year. There’s a similar-sized Chrysler-Jeep store a little more than half a mile away, with a family tradition nearly as long. If Chrysler’s Project Genesis consolidation plan is to succeed, stores such as Monarch Dodge and its neighbor probably will have to reach a deal so they can combine all three brands under a single roof. That means one will have to buy, and one will have to sell. Although dealers reacted positively to the plan Chrysler presented here leaves single-line stores with sharply reduced offerings. John Wolkonowicz, an analyst for Global Insight in Boston, says Chrysler faces a challenge in persuading dealers to go along. “It’s all well and fine to plan this kind of stuff,” he says. “But they don’t have a lot of clout with dealers because they don’t have a lot of hot products.” MONTVALE, N.J. — After more than nine years, Mercedes-Benz USA has settled a class-action price-fixing suit, bringing the total settlement to $17.5 million. Individual Mercedes-Benz owners in the New York area who participated in the suit will be paid set amounts by a court-appointed administrator. Mercedes-Benz USA agreed to a $9.5 million settlement — which includes its company-owned store, Mercedes-Benz Manhattan — to end the 1999 suit. It alleged price fixing between the sales organization and 25 dealers in the New York region. Twenty-three Mercedes dealers who also were sued had settled previously for $8 million. That brings the total settlement in U.S. District Court in Newark to $17.5 million. Mercedes-Benz and the dealers “deny liability and have settled purely to avoid the expense and uncertainty of complex litigation,” according to legal documents. The class-action suit alleges that Mercedes-Benz and the dealers “unlawfully agreed to fix, raise, maintain and stabilize prices” of vehicles sold in areas of the New York region that include portions of New York, New Jersey and Connecticut. The suit alleged Mercedes-Benz buyers paid more than they otherwise would have for the vehicles (see chart below). The settlement notes that actual payment is likely to be less than proposed amounts for specific models because of payments for fees, expenses, incentive awards, administration and other fees, according to the court. At a hearing March 11, the court will decide whether to give final approval to the settlement, allocation plan and payment of attorney fees and expenses. Mercedes-Benz fought the class action for more than a year after all of the 23 individual dealerships had settled. Six dealers settled in September 2003 and 17 in September 2006. Mercedes-Benz USA decided to settle after the arrival of CEO Ernst Lieb, who said he wanted to end the costly dispute. One dealership involved in the class action, Beifus Motors Inc. in South Orange, N.J., was not part of the settlement because it went out of business in 1997. Mercedes-Benz could not say how many owners would get payments. All claims by owners have to be postmarked by April 25.c Price suit Mercedes owners and lessees in the New York region who purchased or leased between Feb. 1, 1992, and Aug. 30, 1999, could be paid the following. C class: $100 ML: $348 E class: $422 S class: $578 CLK: $613 SLK: $624 SL: $810 CL: $896 The human element Hodos sees the logic in Chrysler’s grand plan, which was the major subject of the three-brand make meeting here during the convention. But he thinks the road ahead will be tough. “It’s just not that simple,” he said in an interview outside the make meeting. “It’s not like one company just buying another. see DEALERS, Page 66

Table of Contents Feed for the Digital Edition of Automotive News - February 18, 2008

Ford cuts equipment combinations on '09s Lenders shun subprime market Toyota dealers test satellite service centers Despite cost, more carmakers use laminated glass Merger produces turnaround firm Chrysler would shut to move Plastech work Jeep accessories: Mo' for Mopar Auctions: Repos are rising Automakers face more child safety rules Supplier Personnel Family-owned stores could be tough sell for consolidation What would lineup be with brands under single roof? Mercedes will pay $9.5 million to settle suit Beru revamps strategy to boost profits, growth Jaguar: Dealers take 10,000 customer deposits for XF sedans Chrysler exec: Performance segment will survive Mahindra to offer hybrids in U.S. Mazda ad agency hires VW and Mini creative whiz Icy weather and perhaps boredom chill roadster sales GM, Saturn: What's after Reynolds? Ford: Mid-sized model year for mid-sized cars Kia's new American boss: Let's boost sales Rolls gets sporty Luxury brands push to meet demand in Russia Dealer is makers' best voice in D.C. Get real, Kia, Hyundai Face it, Detroit: Trimming dealers will be expensive GM has confidence in the Chevy Volt It's no wonder auto sales are declining A workable idea: GM dealer buyouts It's deja vu again with reborn 2CV Nothing beats face to face There's a person behind that e-mail Buying cars online makes perfect sense Bush seeks to save 2008-11 CAFE rules Personnel Lear investor: No regrets about blocking buyout GM CFO is mum on more aid to Delphi Dealers Road to tomorrow is paved with plastics Council aims to keep Ford current on environmental issues VW ponders Phaeton's U.S. flop, may try again McGuffie is Covisint's president In hydrogen race, Mazda seeks quicker route Suit seeks to enforce title-washing remedy Suppliers to the 2008 Buick Enclave Mercedes, Audi warn dealers: No sales for export Sykora wants CAFE flexibility Minority dealers see tough times in 2008 Arlena Sawyers Toyota goal: Create stress-free store NADA's Taylor predicts 15.7 million U.S. sales this year Honda widens support for dealer ad groups Jay's jabs Survival 101: Get lean, work harder Microsoft will test dealership system Farley wants market-by-market sales strategy Entertaining the troops Report: Detroit 3 cutbacks curb rental-fleet sales Dilts: High interest rates hurt industry GM asks for dealer assistance on quality On the Record Fisker: We're close to making plug-in car J.D. Power exec: Internet leads are slipping away Minority auto group nears 2 deals Garmin makes navigation technology deal Tenneco wins Ford work B-P-G focuses on new product push Volvo offers cash to thin the herd Cadillac challenges dealers to boost sales Chevrolet can stay No. 1, if it will fight GM will push a green marketing message Saturn is expected to be GM's growth brand Certified used sales help Honda dealer profits Hummer counts on pickup to perk sales Mazda will boost marketing budget, unveil Mazda6 Saab dealers to get new vehicles Toyota wants even better customer loyalty Infiniti stresses profits and customer satisfaction Mitsubishi CEO sets tough U.S. sales goal Nissan exec: New models will boost per-store sales Suzuki dealers cheer return of incentives Ford to boost dealer margins Jag dealers anxiously await the XF Ford executives vague about Mercury future Subaru dealers want diesels, hybrids Acura upscale shift inspires 'great faith in the future' BMW readies national loaner-car program Land Rover: Future upbeat, unclear VW dealers get vehicles on wish list Chrysler dealers OK with consolidation plan Mercedes pushes dealership standards Porsche shrinks as luxury segment lapses Large Hyundai dealers get more room to roam Execs' exit stuns Kia dealers Ford recalls 180,000 trucks over door part, fuel hose GM posts massive loss; eyes N.A. profits by 2011 Big-truck sales fall 33.5% in Jan. WTO rips China's tariffs on imported auto parts Fiesta will rejoin the party in the U.S. UAW's Valentine to Delphi: Hands off our pensions Rx for dealership flux: NFL draft + Mideast bazaar Toyota gets the boot in Mexico Nissan triples female managers Silverado hits a million, rolls on

Automotive News - February 18, 2008

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