Could there be a rational reason for the sales bank?
Bill wrote:
I’ve been thinking about CG’s continued production of vehicles that have nowhere to go other than storage lots.
Now that the auto companies have farmed out so much of their component and sub-assembly production to outside contractors, the auto makers may not have as much ability to control their production output as we may think.
Is it possible that the contracts that CG has with component suppliers require CG to accept everything the suppliers can deliver up to the limits for which CG had originally contracted?
If so, perhaps it does make sense for CG to go ahead and use those components to produce unassigned vehicles. (If the parts and labor have to be paid for even if the plant was idle, it may actually be less expensive to rent storage lots for the unassigned vehicles than to come up with warehouse space to store unused components.)
That’s something to think about.
Unfortunately we also have executive-speak which makes it seem as though Joe E. is more along the lines of “useless brown-noser” than “clever but pushed into a bad spot.” To wit:
Detroit News quoted Eberhart as saying Chrysler was trying to get “its unaccounted for unsold inventory ‘down toward zero’ in the next several weeks.”
To clarify, he means the inventory that he was pretending didn’t exist, not the massive parking lots filled with officially accounted for sales bank vehicles.
“Eberhardt also said dealer inventory was in the low 500,000s, consistent with the automaker’s year-end goal.”
Who sets these goals? Their ambition seems low. Bob noted “15,000,000 vehicle sales total for the industry/12 months (I am simplifing here) = 1,2500,000 total industry build x 12% market share = 150,000 vehicles. 500K sounds way high to me…..especially since winter is death to car sales usually.”
“I expect the market to be about the same level it was this year,” he said. I’m sure Chrysler’s economists are much more concerned about next year’s market than Joe is, especially with oil apparently about to rise again. Also, the market may stay in the same place, but Chrysler’s customers seem to be going elsewhere, and Toyota and other Asian automakers keep adding new North American factories; and then there’s China. But that’s okay according to Joe-logic because the market will be in the same place and they only have 500,000 vehicles. You know, just three or four months’ worth. Busily rusting in massive parking lots wherever you can find open space in Michigan and Ohio.
a ticking time bomb if u ask me.
Bill may well have a valid point. However, that is then going to presume that the suppliers are going to drive CG into bankruptcy or over into a sale to someone. Would it not be an argument to say “NO!” As in NO more. Let the suppliers scream if they want, however, if they are the ones driving this madness, then they all stand to lose big time. Is this where they want CG to go. I want to say I doubt it, but then Chrysler has always been about doing something beyoond comptentcy.
Up here in Ontario where they build the 300,charger,mag ect.there are huge lots filled with these cars all over the city.
I GOT 1 IN MY DRIVEWAY GUYS…
I guess we wouldn’t mind have a miniature sales bank here as well ;)
Get real will you guys, some of these cars on other lots are cars that need some final work. Some are brought back to the plant for final work. I just think it is sad that this has happened to DCX, but be sure what is done in the dark will come out in the light. Honesty is a lost trait in North America.
DCX sucks… Chrysler built decent cars up to the early 70’s but was to concerned with profit. Little cars = little profits, that thinking almost forced them out of business. Enter the crafty & tricky Damlier folk, yes they are going to suck Chrysler to near death then dump to who ever wants a has been player in the auto market. I’ve owned 3 Chryslers 2 pre/ 1 post takeover. All sucked. The way they treat the American worker sucks too, not nearly as good as Ford. Chrysler is like the old USSR miltary, everything looks real good on the outside but under the attractive skin lies under enginered parts/systems. Super lousey customer service/ warrantees. Just keep caring for your old Chryslers….. an American owned and operated Chrysler is just a silly pipe dream. These days I say just buy any American made car that makes you happy, does it really matter if it has a label on it that says Honda or Toyota or Ford? NO.