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Chrysler flexes parts arm

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Chrysler flexes parts arm

Carmaker to use after-market division to generate revenue until new products arrive

Alisa Priddle / The Detroit News

Chrysler Group LLC is trying to leverage the strength of its Mopar parts division to boost its bottom line and reputation for customer service.

For many enthusiasts, the word Mopar is synonymous with Chrysler vehicles. For others, it refers to a company-made part. Chrysler's new management wants Mopar to stand for everything a customer experiences after the purchase of a new car -- from oil changes to seat covers.

Mopar is Chrysler's fifth brand, after Chrysler, Jeep, Dodge Car and Ram Truck. And during the automaker's new product drought, its importance has grown as a means to draw people to the dealership, inspire consumer loyalty and generate revenue for a company whose sales and profits slid until it was forced to declare bankruptcy and form a partnership with Fiat SpA.

Pietro Gorlier is responsible for ensuring Mopar is profitable and building a reputation for quality parts and service.

He was brought over from Fiat SpA by Sergio Marchionne, CEO of both companies.

"Mopar, our parts distribution business, has been reconstituted as a business under Pietro Gorlier's leadership," Marchionne said in November when Mopar's new role was outlined.

Mopar has "clearly defined penetration volume and efficiency targets, all of which are designed to generate a substantial improvement in profitability and to strengthen the equity of our brands," Marchionne said.

"Mopar now stands for everything after the sale," Gorlier said.

Parts and service represent a "huge asset, if managed properly" and is the area where there is the most to gain, said Gary Dilts, senior vice president with J.D. Power and Associates in Troy.

Gorlier said many dealers were more focused on sales -- until that well started running dry.

"When there was no longer traffic in the showroom, dealers turned their attention to service and parts in a way they never had before," he said. They recognize "survival depends on having efficient and reliable aftermarket."

Market share at 8.7%

Chrysler's market share is 8.7 percent, reflecting a lineup with only one all-new 2010 model: the Ram heavy-duty pickup.

"Fixed costs don't go down just because sales are off," said Randy Berlin, director at Urban Science, a Detroit consulting firm.

Service, parts and accessories are a way to drive revenue now and help bridge the gap until new products draw showroom traffic.

Chrysler has several initiatives, including express oil change lanes, extended service hours and more technicians at dealerships, better logistics to ship and stock parts, easier to install accessories and an online Mopar store.

Accessories contribute $400 per vehicle -- and as high as $1,000 on some models. Chrysler's five-year plan calls for the $400 average to grow 50 percent. There are about 10,000 accessories now, and 100 new items are added annually.

Business will grow as vehicle sales increase, but also by promoting how vehicles can be customized with Mopar parts.

Chrysler shows Moparized vehicles at auto shows. Some are on display in New York now.

Because many buyers choose accessories at the time of purchase, Chrysler is developing accessories for new cars earlier so all are ready in time for the launch.

A Mopar eStore launched in December to capture the 35 percent of Internet shoppers who buy parts online.

"I want to sell everything that can be used by someone driving a car," Gorlier said.

Service lacks street cred

All the moves are designed to build on the strength of the Mopar name that dates to 1937.

But while Mopar parts have a good reputation, customer surveys show Chrysler service does not, Gorlier admits.

"We need to take care of service. Only through good customer service experience can you get people back," he said.

Dealers can make an immediate impact by extending hours and opening express lanes. About 60 percent offer service Saturdays, fewer on Sunday, he said.

Extended hours are crucial with fewer dealers -- Chrysler terminated 789 franchises but has made moves to reinstate 86 -- and customers may come from a greater distance, Berlin said.

Chrysler wants 80 percent of dealers to add express lanes by 2014. About 150 of 2,300 Chrysler dealers have them and another 100 have applied.

That includes Chuck Eddy a dealer in Austintown, Ohio, who is spending about $200,000 to create separate lanes and adding nine regular bays to his 24 and creating a new-car preparation area.

Eddy expects his express service will be running in 60 days and believes it's money well spent.

Dealers also are to add technicians. Chrysler will increase training and is working with recruiters to help dealers add employees.

"We need to overcome the bad perception customers have of our dealers as not convenient," Gorlier said.

Added Dilts: "If you goof up in service, you have credibility issues. It is an equation for trouble. If you lose it, it's hard to get back."

Under Gorlier, parts and service are one entity, and the Fiat Group World Class Logistics system was implemented in October to manage Mopar's 280,000 parts.

The mission: Get the right part to the right place at the right time.

Dealer Tammy Darvish of DARCARS Automotive Group in Silver Spring, Md., agrees Chrysler's logistics could improve. She also has Toyota Motor Corp. franchises and prefers its system with depots all over, and nighttime delivery so parts are available first thing in the morning.

"It will help a lot, especially in the collision business where you need speed and if you lose a day because of parts delivery, it's really a big deal," Darvish said.

Dealer Eddy applauds the initiatives: "With the rebirth of Chrysler and new launches starting in June with Jeep, a Chrysler dealership is one of the most valuable franchises, domestically, you can own."

From The Detroit News: http://www.detnews.com/article/20100406/AUTO01/4060322/1148/auto01/Chrysler-flexes-parts-arm#ixzz0kK1k77Pd

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