Sunday, June 21, 2009

A Dealergate Example: Quality Chrysler

The Albuquerque Journal is following the demise of Quality Chrysler in Albuquerque, one of the four dealerships in New Mexico cut off by Chrysler corporation in Dealergate. A story printed a few days after the cutoff (subscription required) noted the 22 year old DiLorenzo family dealership now exclusively sells used cars.

The article noted that the Chrysler signs were still up. Director of Operations Annette DiLorenzo Thayer said they're not coming down until someone from Chrysler takes them down. "We had the privilege of renting the signs ... Chrysler has to come take the signs," she said.

The article also said a large number of cars bought from Chrysler are still parked on the Quality lot. It said most of that inventory will go to a dealer on the west side of Albuquerque, as Chrysler will no longer allow the DiLorenzos to sell them. Worse, before cutting off all contact with Quality at midnight on Tuesday, June 9, Chrysler made it clear it wants $350 per vehicle from Quality to move leftover inventory to other dealers.

I think the DiLorenzo family is right about the signs. Chrysler took their investment and cut them off. Chrysler made sure the dealership no longer has any relationship with, or responsibility to, Chrysler Corporation. But I would also say the dealership should charge Chrysler rent until the signs are removed from their property.

The matter of the inventory seems to be a bigger problem. The article did not indicate whether Chrysler is reimbursing the dealer for the price paid for the vehicles. But the situation suggests several possible solution elements. One would be charging Chrysler rent — maybe $400 per vehicle — for the time the cars remain on Quality's lots. Or perhaps they should avoid the $350 per vehicle charge entirely by simply driving the cars across the valley to their new destination. Or maybe they should drive the cars across the lot, park them under the used car signs, and advertise them for sale as "like new."

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