Okay, that’s not exactly a scorching head line, Chrysler didn’t "get it" up until their first bailout, and hasn’t gotten it since Lee Iacocca departed in the early 90’s.
Thursday’s announcement that Chrysler would close 1/3 of its dealerships may have sounded like a sweeping development to some, but to me it sounded like bad business as usual.
The inefficiency (pronounced-insanity) of the American auto industry is writ-large on the landscape of the American economy. Yet Chrysler actually dovetailed the announced closings with a justifying statement that 50% of its dealerships generate over % 90 of its sales. I’ll write that again; 50% of its dealerships generate over % 90 of its sales.
I’m not exactly John Nash, but I’m a guessin’ that means the other 50% of dealers generate 10% of its sales.
So it’s completely logical then, to close 33% of its dealers? I know that the remaining 50% of those dealers generate sales, but I’d bet (based on the law of averages and Pareto principle) Chrysler could salvage 99% of its sales and close 45-48% of its dealerships.
Hey Chrysler, I have an idea. It’s based on a question my former boss used to remind me to ask when evaluating any executive. Do they want a big ego or a big bank balance? It still looks to me as though there’s a degree of "size matters" running through the veins of the dinosaurs at Chrysler.
Here’s my idea. Close all the dealerships that are not profitable. Stop making the cars that are not profitable. Stop paying wages that are not profitable, owning real estate for plants that are not profitable, etc, etc. . . .
Here’s why: every American home has a purchasing manager, and those purchasing managers are running under the budget necessary to finance your folly.
We simply can’t afford to hitch ourselves up to nags anymore. We don’t care about your corporate emblem, your history, your legacy or the once untouchable status of the American auto workers. We’re just trying to get by.
So don’t tell us that your answer to this mess is closing 1/3 of your dealerships when 90% of the sales are done by 50% of the dealers. That math just doesn’t add up.
So it's clear, Chrysler still doesn't get it. I suppose that's okay, because we're going to stop giving them excuses (pronounced-bail outs) real soon.