| DaimlerChrysler has basically thrown in the towel by | | | | your wildest fantasies, an American car dealer sending |
| hiring J.P. Morgan Chase to find a way for the luxury | | | | the part back to Detroit for rip down and investigation. |
| German auto maker to divest itself of the Chrysler | | | | It's not even vaguely possible. |
| automobile company here in America. We went back | | | | Sensitive Competitive Pricing - No Games |
| and took a look at our stock research on the original | | | | Sure, not in my lifetime, maybe in yours. When you |
| German purchase of Chrysler and wondered how we | | | | walk into an American dealer, they still try to snow you. |
| got from there to here. Chrysler was a stock pick of | | | | In our investment work when we get involved in stock |
| ours as far back as 1981 when Lee Iacocca brilliantly | | | | investing, we do hands on stock research. If it's |
| prevented bankruptcy, and turned the company | | | | Detroit's manufacturers, we walk into dealers all the |
| around. | | | | time to see what's going on. We are looking for tidbits |
| When it comes to stock investing, you have to look | | | | of information, what we call the scuttlebutt method of |
| behind the fluff, and figure out what's real. Our stock | | | | stock investing. |
| research shows that Chrysler is in the same boat as | | | | We were in a Chrysler dealer recently, and looked at |
| General Motors and Ford. All three companies in their | | | | a model that seemed interesting on the showroom |
| internal budgets which is how they guide their | | | | floor. The car had a base price of $22,000; the bottom |
| companies through the next 12 months and beyond, | | | | list price after accessories was $39,000. You got to |
| have built into their plans continued degradation of their | | | | be kidding? I have done advanced postgraduate |
| domestic automobile market share. This very simply | | | | courses in mathematics. I would never be able to |
| means that they plan to continue to lose market share | | | | compare one dealer's pricing with another when you |
| to the Japanese in each of the next three years. | | | | are itemizing numbers in that manner. |
| This is no different than a boxer stepping into the ring | | | | When you walk into a Japanese dealer, there are no |
| and thinking about which of the next several rounds I | | | | games. The car comes from Japan loaded, the price is |
| will get knocked out in. It's throwing in the towel, and | | | | the price although negotiable, and the lease price is the |
| you don't want to get involved with stock investing | | | | lease price. You can sometimes negotiate more miles |
| with companies that have that attitude. Chrysler along | | | | on a lease, as I did recently, but basically you can very |
| with its two American counterparts General Motors | | | | easily work dealer against dealer for the best price |
| and Ford must implement a couple of very simple | | | | possible. |
| ideas to make a comeback. They are: | | | | The America car dealers disallow this negotiation |
| 1) Manufacture a reliable, quality product | | | | method by having 30 plus items individually priced on |
| 2) Sell it at sensible, competitive price without playing | | | | the vendor's window sticker. How are you going to |
| games with the customer | | | | compare prices using that methodology? The answer |
| 3) Service their cars in an appropriate manner that | | | | is you are not, and they know it. God forbid you are a |
| retains and builds customer loyalty | | | | woman going in to buy a car; they really take |
| Let's look at these ideas | | | | advantage in that instance. |
| It is unfortunate that our home based car | | | | Service and Customer Loyalty |
| manufacturers manufacture "crap", but that's just what | | | | I live in Westport, CT., you can't buy a house under a |
| it is, pardon the expression, and always has been. We | | | | million dollar, in fact a million dollars is a tear down. We |
| never realized it as consumers until the Japanese | | | | have a Chrysler jeep dealer adjacent to Westport |
| came along and implemented zero defect | | | | which is the closest dealer if you want to buy any kind |
| manufacturing. This means Toyota, Nissan, and Honda | | | | of Chrysler. Upon inspecting it, I found the shop |
| will not allow a car to leave Japan unless it is perfect | | | | employees who handle the customers to have grease |
| coming out of the factory. | | | | on their clothes. These are not the guys who fix the |
| We on the other hand have made a decision to allow | | | | cars. They are the service advisors. |
| less than perfect cars to leave the assembly line. | | | | Eighty years of building cars and they can't get their |
| Detroit's decision is that the consumer after taking | | | | act together, and Detroit wants to know why they |
| delivery will make a list of problems, and then have the | | | | continue to lose market share. In the last two or three |
| dealer fix the issues at the dealer level. This is | | | | years, Japan has begun implementation of a free oil |
| unacceptable to the American consumer, and Detroit | | | | change policy. Everybody thinks they are being kind to |
| should immediately take steps to fix it. | | | | their customers. The truth is the cars never break |
| Detroit won't however. They are locked into a | | | | down, people were leasing their cars, and |
| different mindset. In Detroit's way of thinking, it would | | | | consequently never changing the oil. Cars were |
| be prohibitively expensive to implement zero defect | | | | coming back with 30,000 and 40,000 miles on them |
| manufacturing in this country. Although this might be | | | | without oil changes. |
| true for factories currently in production, this would no | | | | The reason is that Japanese cars really do not require |
| be true for new factories coming on stream. Since | | | | maintenance for 30 or 40K. American cars on the |
| GM and others could have implemented this policy | | | | other hand begin to fall apart after 30 or 40,000 miles. |
| years ago, and chose not to, Detroit's big three is at | | | | It is said that the engine on the Honda is so strong that |
| least a decade further behind the eight-ball. | | | | it will outlast the body of the car. If you look at |
| When you take delivery of a Japanese car, it is | | | | American car dealer service centers, they are always |
| perfect. Everything fits, everything works, and very | | | | busy doing repairs. This is not the case at Japanese |
| seldom is there an issue. I do remember buying a new | | | | car dealers. |
| Acura MDX and having the starter fail the first week | | | | DaimlerChrylser will find a buyer for its Chrysler line. |
| out of the showroom. No only did Acura tow the MDX | | | | General Motors is even talking about buying it, which is |
| in and replace the starter at no charge, but I found out | | | | like the lame leading the blind. GM is trying to save and |
| later that the faulty starter was air expressed to | | | | realign itself, and wants to take on what German |
| Japan to determine why it failed. Acura wanted to | | | | super management teams have FAILED at, which is |
| learn from the experience. Could you ever imagine in | | | | taking Chrysler to the next level. Our answer is SURE. |