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Chrysler helps dealers recapture orphaned owners

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Chrysler helps dealers recapture orphaned owners

Bradford Wernle

Automotive News -- May 10, 2010 - 12:01 am ET

Kathy White recently paid Oroville Motors in Oroville, Calif., $200 to do warranty repairs on the steering column of her 2007 Chrysler 300C even though she could have gotten the work done for free if she had driven 32 miles to the nearest Chrysler dealership.

But White paid the extra money because she likes the service she gets at Oroville Motors, a former Chrysler-Dodge-Jeep store that was rejected in Chrysler's bankruptcy. Besides, the store is only 41/2 miles from her home.

Another reason: She, like many orphaned Chrysler customers, is angry at the company -- she even wrote to the White House about it -- because Chrysler terminated the franchise of a dealership that treated her well.

Chrysler knows it needs to lure customers like White back into the fold if it is going to regain the ground it has lost in the market since its bankruptcy. At the request of dealers, the company recently launched a program to help surviving dealers locate and lure customers who were orphaned when the dealerships that sold them their vehicles were either terminated or closed for some other reason.

Under the program, Chrysler will pay for communications that dealerships send in May to orphaned customers with aging vehicles they might be ready to replace. After that, dealers can decide whether they want to pay Chrysler a fee -- $99 or $149, depending on the number of customers -- to handle such communications, including e-mails, direct mail and phone calls.

Chrysler also offers orphans a $1,000 spiff on new vehicles, said David Kelleher, a member of Chrysler's National Dealer Council and owner of David Dodge-Chrysler-Jeep in Glen Mills, Pa. Some dealers throw in incentives such as oil change discounts.

A recent Chrysler memo acknowledged that "hundreds of thousands of unassigned owners are in market with no dealer contact." The memo says the "buy rate has declined by almost 50 percent" for this group, meaning those customers are less likely to buy a new Chrysler.

Chrysler spokeswoman Kathy Graham said the Business Development Center For Unassigned Owners program seeks to help dealers find any customer orphaned in the past five years. whether because of Chrysler's bankruptcy or any other reason. About 600,000 customers are in that category, she says.

The number of Chrysler dealerships has declined from 3,749 at the end of 2006 to 2,332 at the end of March. Chrysler's market share dropped from 12.9 percent at the end of 2006 to 9.2 percent at the end of the first quarter this year.

Chrysler will need all the customers it can get if it is to achieve CEO Sergio Marchionne's goal of doubling global sales to 2.8 million units by 2014.

Sensitive issue

The issue of orphaned customers is sensitive. Many rejected dealers are angry because they believe that they, not Chrysler, developed the customer base.

Alan Spitzer, a former Chrysler dealer who operated five Chrysler dealerships in the Cleveland area that were rejected, says Chrysler has hurt its own sales badly by closing dealerships that had loyal customers.

He points to Greater Cleveland Automobile Dealers' Association statistics that show Chrysler Group sales fell 43 percent in the first quarter while the market rose 15.7 percent in the area. The Ford brand rose 58.2 percent, and Honda was up 28.8 percent.

"I've never seen anywhere near such a dramatic drop in share by any company," said Spitzer, who is also a co-founder of the Committee to Restore Dealer Rights, which has worked on behalf of dealers rejected by Chrysler and General Motors.

Lou Vitantonio, president of the Cleveland dealer association, said there were 38 Chrysler dealerships in the Cleveland area prior to bankruptcy, and Chrysler terminated 17. He believes the loss of outlets is one of several factors in the Chrysler sales loss.

Chrysler's Graham counters that high pre-bankruptcy spiffs a year ago inflated the year-ago numbers.

Winning customers back

Winning customers such as Kathy White back won't be easy. She's not happy that Chrysler terminated Oroville Motors, now a used-car store.

"Would I deal with Chrysler again? Absolutely not," White says. "I don't like the way they've treated their customers. They made some bad decisions in the dealerships they closed. I haven't run into one customer who is happy with [Oroville Motors] closing because they were so good."

When she heard Oroville Motors was closing, White even sent a letter to Chrysler and copied President Barack Obama.

White bought her first car from Oroville Motors in 2000, a Buick. Oroville Motors eventually stopped selling GM vehicles, but White stayed with the dealership and bought a Chrysler there because she liked the way she was treated.

"That's why I ended up with a Chrysler," she says. "It was not because I was in love with Chryslers."

Ro Allen is another customer who was not pleased when Chrysler closed the dealership she patronized, Spitzer Lakewood Chrysler in Lakewood, Ohio.

Allen, a retired pharmacist who owns a 1998 Jeep Cherokee, was so upset about Chrysler that she started a Facebook page entitled "Save Spitzer Lakewood." The page quickly attracted nearly 300 fans.

Allen says that if her service appointment was going to take more than an hour, a dealership employee would drive her home and pick her up when the car was ready.

"Not a lot of places do that, and there's no charge for it," she says. "I had pretty much the same driver most of the time. He knows where I live, and we have all these interesting conversations."

Allen says her Jeep now has 80,000 miles and is running fine.

"If I were to get another vehicle, I'd give serious thought to getting another Jeep," she says. "But I want to buy it from Spitzer. I think they'd give me a good deal because I've been a customer all these years."

WINNING THEM BACK

Chrysler aims to help get 600,000 orphaned owners back by

• Sharing with dealers lists of orphaned customers who might be ready to buy a car

• Sending monthly dealer-branded messages to owners by e-mail and voice mail

• After June 15, offering the same services to dealers for a small fee

Read more: http://www.autonews.com/article/20100510/RETAIL03/305109970/1430#ixzz0nXB21gZx

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