1 post tagged “chrysler”
This week Chrysler Corporation sent out letters of franchise termination to 789 Chrysler dealerships in a painful move to downsize and streamline its dealer network. This number represents almost 25% of the company’s dealerships throughout the United States.
Mike Jackson Chairman and CEO of AutoNation, the largest car dealership in the United States, indicated that, though painful, the necessary steps are finally being taken to allow the domestic Auto Industry to become more efficient and competitive with the foreign transplants.
Appearing on ABC “World News” and CNBC, Mr. Jackson, who has been in the forefront in calling for exactly the changes that are currently occuring in the U.S. auto industry, views this period as the “Worst of Times” and the “Best of Times”. It is the "worst of times" because of the pain the industry will have to bear during this transition period to more efficient operations, as well as the pain that will come as a result of many dislocations of facilities and families.
However looking back, it also will be viewed as the “Best of Times” for the United States as a whole in that the industry will have made a major generational change to a more efficient model of operations necessary for the 21st century.. As a result of these changes the economics of the industry will be positive going forward... Mike Jackson contends.
On CNBC Mr. Jackson continued to highlight the major reorganizational milestones that have been met by the parties to the Chrysler bankruptcy filing, and those that have yet to be completed. This is a painful process, Mr. Jackson goes on to say, but we are witnessing the re-invention of the U.S. auto industry in America. This is a major step in the right direction.
- There will be ‘fewer stores’ with higher “throughput” of vehicle sales. This is a win for the consumer because prices for cars and trucks can actually go down because of lowered fixed costs.
- The Unions have finally accepted equity in exchange for forward commitments for Health Care and other forward funding and are making concessions and now the unions have a significant vested interest in the success of the companies .
- The shutting down of the factories for the next two month to eliminate the manufacture of unwanted inventory, stemming the bleeding of unnecessary costs.
- And finally, the streamlining of the dealer network; though extremely difficult, is absolutely necessary
In response to a question from Jack Welch former Chairman and CEO of General Electric, Mr. Jackson felt that if the bondholders had not come to the table in a sprit of concession, both Chrysler and General Motors would have been forced into a "precipitous" Chapter 7 liquidation that would have sent shockwaves around the world.
Now as a result of all the stakeholders coming together to sacrifice for the long term health of the U.S. auto industry going forward, both auto producers, General Motors and Chrysler, have a chance of emerging from this crisis with a more efficient model of vehicle production and distribution throughout the United States and the rest of the world.
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