Main Body

Chapter 7: An Automobile Legend: The Chrysler Corporation

The third largest domestic automobile manufacturer did not debt until 1925 when a very talented entrepreneur named Walter P. Chrysler (1875-1940) announced the merger of two of this nation’s best-known pioneers the Chalmers Motor Company and Maxwell Motor Company. [1] Much of Walter Chrysler’s initial financial success originated with the dedicated efforts of three of his closest associates Fred Zeder (1886-1951), Owen Skelton (1886-1969) and Carl Breer (1883-1970). (Figure 119) Fred Zeder handled the engineering problems, while Owen Shelton specialized in technological advances. Carl Breer, on the other hand, worked primarily on complicated design questions and other major engine-related improvements. This new automaker soon enhanced its prestige by adding the esteemed Dodge Motor Company to its corporate ranks. [2] With one noticeable exception, the new Chrysler Corporation closely followed the successful business models for local dealerships as first advanced by Ford Motor Company and General Motors Corporation.

Unlike his chief competitors, Walter Chrysler did not insist that his local outlets assume the full financial burden of maintaining large new car inventories with the intention of forcing those dealers to sell as many automobiles as quickly as possible. That was not his style. Chrysler had learned a great deal about the inner workings of the automotive business by closely watching what other leading automakers such as the Dodge Brothers did. John F. Dodge (1864-1920) and Horace E. Dodge (1868-1920), never relied on draconian business methods to sell their vehicles. [3] (Figure 120) Instead, they gave their dealers a certain amount of flexibility when it came to selling their top quality cars and trucks. (Figure 121) The Dodge Brothers consistently high sales volume showed that their more empathetic business approach did indeed work. In accordance with that thinking, Walter Chrysler initially rejected the idea of imposing annual sales quotas. His group of corporate officials fully supported his progressive thinking in this regard. After all, Walter Chrysler was a well-respected Detroit business leader who had personally experienced many aspects of the domestic auto industry during its early stages. He assumed that the high quality and outstanding value of his vehicles would ensure high sales volume repeatedly. A newspaper advertisement, in May 1929, said it all. It asked potential buyers to visit one of the eight Greater Cleveland Chrysler dealerships and drive one of their new outstanding autos during their “Learn the Difference” month. The advertisement further stated that the extra refinements, easy handling and advance engineering of their many outstanding cars should be more than enough to win you over.

As a way of safeguarding against possible market saturation, Chrysler initiated an entirely new concept in which the number of daily orders submitted by individual dealerships would determine factory output. In the early years, it averaged around 180 cars per hour. Each new car received its-own catalogue number prior to shipment. Those Chrysler dealers, located within 400-mile radius of the main factory, had their cars driven to them, while outlying franchises relied on truck carriers to transport their cargo. During the harsh winter months, many distributors depended solely on the railroad to transport their new vehicles to their many sites. The practice of charging dealers an additional factory-related fee for any new car deliveries continued until 1956. The distance between Detroit and its outlets determined the specific delivery rate. [4] The total manufacturing and shipping process took a week to complete. A reasonable business tactic it led to smaller new car inventories.

Unfortunately, that practical business technique that had differentiated Chrysler Corporation from its chief competitors did not last too long. The unstable nature of the national economy and the industry itself warranted the eventual acceptance of more conventional means when it came to manufacturing and distributing Chrysler products. By the late 1920s, both Ford Motor Company and General Motors had developed their-own distinctive car lines in different price ranges. Their business strategy was open ended enough to support high volume, low cost vehicles, as well as, low production, luxury models. Being the last one to enter this highly competitive field proved difficult for Walter Chrysler and his shrewd Board of Directors tried to keep pace with their groundbreaking rivals.

In the early years, members of Chrysler’s Operations Committee frequently argued over car pricing and improved manufacturing techniques. The financial jam they faced then was quite similar to other domestic manufacturers. They wanted to ensure sizeable profits, while maintaining sensible overhead costs. Achieving the proper balance between the two seemed to elude their very best planners. However, everyone producing and selling automobiles concurred that an automaker’s future financial success relied on its ability to demonstrate a certain degree of business finesse at all levels. The many subtleties attributed to that particular commodity in the form of such things as special accessories, body styles and overall weight, played major roles in determining price ranges and market choices.

Ultimately, yearly labor expenditures, basic material costs and current market conditions were the deciding factors. In the case of Chrysler, its dedicated comptroller resolved any-and-all disputes that might originate from its vocal Operations Committee. It accomplished its most challenging goal by determining to the exact penny the costs of the many car models produced by that company annually. Its controller increasingly found itself endorsed tougher factory controls especially when it came to new car sales. That understanding led Chrysler officials, in the early 1930s, to reverse their earlier, no holds barred approach towards sales in order to adopt the already much-maligned annual sales quota formula. Establishing such a no nonsense cost analysis approach depended on a wide range of appropriate economic and financial issues coming together in a seamless fashion. That included fostering reasonable expenditures and profit goals for the immediate future based on widely accepted business formulas and customary guidelines. Maverick thinking in that regard rarely worked.

By the mid-1930s, Chrysler Corporation bragged of having more than 10,000 affiliates nationwide. Any major decisions affecting those many distributors came from shrewd Highland Park leaders who also served as divisional presidents. One of their chief responsibilities, at that juncture, included administering the hated new car sales quota. They also diligently compared recent divisional sales figures with their chief Detroit rivals. With those diverse sales numbers at hand, these corporate officials could accurately predict new car sales for the next model year. For example, they projected that in 1936-37 the Dodge division would be the company’s leader accounting for 33% of all sales followed by Plymouth at 28%, Chrysler at 28% and De Soto at 11%. Actual sales figures for that year were very similar to those initial projections.

The company required those individual franchises wishing to extend their present contracts beyond the traditionally accepted three to five year cycle to sell about 70% of their annual new car quota. A similar system had worked well for the top two major automakers for years. If the flourishing economy of the 1920s had continued unobstructed into the 1930s and 1940s, new car sales for Chrysler might have reached extraordinary new heights for a great many years yet to come. Unfortunately, the Great Depression of the 1930s all but eradicated that prudently orchestrated system of business checks and balances. Special dealer considerations and factory-motivated discounts, first introduced in the early 1930s, provided some struggling outlets some leeway when it came to satisfying their quotas. However, those considerations had all but disappeared by the mid-1930s as fewer and fewer dealerships met their annual requirements. Plummeting car sales meant that the bulk of revenue generated by dealerships in the 1930s came from repair services and auto supplies.

To illustrate this point, net profits for Chrysler distributors dropped from $1,500,000 in 1929 to $100,000 by 1934. Persistently poor sales nearly bankrupted this up-and-coming manufacturing concern. Luckily, its shrewd Board of Directors fully appreciated the seriousness of the economic predicament they faced and did everything within its power to avert a catastrophe. Those efforts included providing extensive financial aid to its many money strapped franchises starting in 1935. In addition, its board insisted that its independents consolidate their operations immediately.

That factory-inspired consolidation effort resulted in many local dealerships selling the full range of Chrysler products all under one roof. Being able to sell all Chrysler vehicles, in one location, enabled many struggling outlets to survive this most dreadful economic ordeal.

1941 Spacious Plymouth Interior
1941 Spacious Plymouth Interior

With the Second World War only a few weeks away, Highland Park announced, in November 1941, that it planned to follow recently issued federal guidelines. Those guidelines specified that all automobile distributors arrange with their customers to pick up their new vehicles at the factory, and not the dealership. [5] Corporate executives said that following through with that simple task would help to speed up the delivery of defense materials to critical sites located throughout the country.

Chrysler dealerships not only helped the war effort by conserving precious materials; but also, providing inexpensive car repairs whenever possible. Once peace returned, Chrysler’s distributors started providing a full range of new services as well as offer remarkable deals on available vehicles. For example, one of the leading Cleveland dealerships B.W. Blaushild Motors, in 1947, opened an all-new showroom and service area. [6] The $1,000,000 showroom featured two special murals. Painted by the noted artist William Arndt of the Cleveland Institute of Art, these murals included caricatures of Bennie Blaushild and his staff. [7] Trying to gain an obvious business advantage over its two chief rivals General Motors and Ford Motor Company led Chrysler Corporation to introduce a brand new kind of tire and safety rim starting in 1948. Plymouth dealers nationwide called this newest option “Super-Cushion Tires.” [8] Corporate officials claimed that those new tires and safety rims eliminated much of the road shock common to earlier models. They also made stopping the vehicle much easier while lessening the chances for blowouts. Their new, slogan of the late 1940s said it all “Plymouth Builds Great Cars.” (Figure 124)

Chrysler’s Board of Directors proudly unveiled an education program geared specifically for its mechanics. Considered the largest single undertaking of its kind at that time, it involved more than 60,000 mechanics from 9,500 franchises. [9] Its course work covered the gamut from fundamental sound engineering principles to the latest automotive techniques. Program graduates and their distributors received special certificates for their dedicated efforts. The interest of Chrysler officials in its many auto franchises went far beyond just educating their mechanics on the latest automotive breakthroughs. Its shrewd board members endeavored to create even stronger business ties with their many dealers by establishing meaningful, new discourse that dealt with pressing issues that involved both corporate leaders and franchise holders.

With that very thought in mind, Chrysler’s General Sales Manager James A. O’Malley, in November 1951, announced the creation of a new dealer’s council. This body not only analyzed business issues and economic problems germane to Chrysler dealers; but also, supplied workable solutions to their greatest economic and financial predicaments. Forty-three dealerships attended the first session in Detroit, MI with two representatives from each of the 28 sales districts serving on its board. [10] Chrysler new car sales for the 1953 model year were 20% higher than in 1952. To celebrate this major accomplishment, Highland Park unveiled a new business plan in the spring of 1954. It concerned entrepreneurs who wanted to own and operate their-own Chrysler dealership. [11] Chrysler President Tex Colbert explained that with only a minimum down payment a qualified investor could now purchase a desirable local franchise very quickly. Under this agreement, corporate executives would assist them by covering the many expenses incurred in buying such an outlet. One of its main provisions called for the eventual retirement of all incurred debt owed to Chrysler Corporation through pre-determined deductions that came directly from a new dealer’s profits.

Throughout the 1950s, Chrysler various passenger car divisions vied with each other to provide the best possible repair service. Nowhere was that commitment more evident, than in December 1955 when De Soto unveiled its latest effort. Dubbed “Quality Dealer Program,” this new repair program aimed at expanding its current customer-base, while increasing the profit ratios for its nearly 3,000 dealers. [12] More streamlined operational procedures combined with a more efficiently run franchise renewal process, topped the list of issues corporate leaders intended to resolve. Board members addressed those very sticking points in April 1957 when they signed a new agreement pertaining to both franchise renewals and new car sales quotas. It affected nearly 9,000 franchises. [13] This new agreement may have eliminated some of the earlier unfair practices associated with new car sales quotas and dealership renewals; however, it did absolutely nothing to end the much detested 30-day termination clause found in most franchise-related contracts.

Dealerships rarely sued manufacturers over alleged business infringements simply because their ironclad franchise contracts prohibited them from taking such action. [14] What differentiated the April 1957 agreement from earlier ones was the fact that Highland Park pledged to use a more accurate mathematical formula when determining projected new car sales. It also spelled out in detail the amount of assistance each distributor could expect to receive from the board in order to maintain a steady increase in new car sales over the years. A third feature to gain the attention of most Chrysler dealers, dealt with the issue of sudden franchise closings. Under this latest arrangement, the company offered direct monetary support to those dealerships that faced that specific financial bind. Chrysler officials would also aid distressed dealers when it came to deposing of their current site and the remaining new cars found within their inventory. Such supports would ensure a smooth transition in ownership no matter what the economic or financial circumstances might be for a dealership at any given moment.

Following the example first laid out by Ford Motor Company and General Motors, Chrysler’s Board of Directors, in the early 1960s, initiated a new cooperative-wide business effort intended to improve its thousands of service departments quickly. As part of that major expansion effort, corporate officials introduced a brand new approach towards customer service they called “Express Service.” It signaled the start of sweeping changes intended to affect its distribution system positively. This new initiative also prescribed specific equipment requirements for all dealerships that fell in line with its detailed new business plans and updated operational procedures. The slump in sales activity during the 1959-60 model years and the eradication of the De Soto line of cars, in 1961, prompted such decisive action. On a lighter note, Chrysler proudly hosted its Annual Teachers’ Workshop in 1962. [15] Aimed at high school teachers who taught special automotive courses this national workshop took place in five centers.

Although the decade of the 1960s experienced a marked decline in the number of domestic automobile manufacturers that negative business trend had no effect on the Chrysler Corporation as its number of it domestic franchises reached 6,200. [16] When asked why the 17 Greater Cleveland Chrysler-Plymouth and Dodge dealers consistently reported high new car sales volume, Highland Park responded that those outlets’ never-ending commitment to detail seemed to have accounted for much of their recent success. No matter the size of the repair, those leading dealerships wanted every customer to be satisfied with the service they provided. [17] However, that was not apparently the case in other parts of the nation as growing customer complaints about poor repair service reached new epidemic proportions by the late 1960s and early 1970s.

Chrysler’s Vice President of Automotive Sales and Service Robert B. McCurry claimed that consumer advocacy groups were the source of much of this problem. With the intention of countering mounting criticism, Chrysler Corporation introduced its-own Owner Communications Program in 1972. [18] The executive body hoped to improve souring relations between the factory and buying public by offering a wide range of new incentives intended to sweeten the deal. The inclusion of valued extras such as free automatic transmission and special side moldings pleased many buyers. [19] Important incentives, like that, may have bolstered sagging new car sales on a temporary basis; however, they had little impact in improving the bottom line over the long-term. Decreasing profits due primarily to escalating interest rates, which exceeded 14% by 1974, all but destroyed those popular factory incentives.

In the early 1970s, Chrysler Leasing Service began offering reasonably priced repair service at its various sites. [20] However, it did not thrill most Chrysler owners. A dramatic collapse in new car sales for the 1975 model year prompted this Detroit manufacturer to close over 300 additional dealerships. [21] In an attempt to bolster plummeting new car sales, Chrysler executives, in March 1979, unveiled their newest internal communication system. This new, state-of-the-art communication system included a wide assortment of videotape recorders and tapes geared specifically for their many sales representatives. [22] Those tapes offered worthwhile business suggestions intended to improve sales. Most importantly, this new communication system afforded its more than 35,000 employees a direct link with headquarters. Unfortunately, a further drop in new car sales activity, during the autumn of 1979, convinced its penny-pinching Board of Directors to close yet another 367 outlets nationwide. [23] Even the short-lived increase in new car sales, generated by the growing popularity of the Omni, did not reverse this earlier negative sales trend. In terms of franchise closings, Chrysler Corporation had noted a significant decrease in the number of its dealerships over the past 25 years.

Chrysler Corporation recorded an unprecedented $536,000,000 deficit in August 1989. [24] The Washington-based Chrysler Loan Guarantee Board took drastic action that same autumn when it offered guarantee debentures worth more than $300,000,000. Those securities paid a whopping 11.4% interest rate. That announcement occurred on the heels of another $500,000,000 debentures offering that the same board members had issued two months earlier. In late 1989, Chrysler’s net revenue stood at $2,090,000,000. Much to the disappointment of its many investors, the number three Detroit automaker had not experienced any appreciable profit gains in nearly two years. In fact, Chrysler’s domestic sales for the 1989 model year had plummeted 44% from 1988, while its total share of the domestic auto market had dropped to only 9%. It would take the financial success of the minivan before new car sales improved significantly for executives at Highland Park. A recent surge in Dodge sales was the only good news to report in 1989. Generous corporate rebates ranging from $200 to $300 and 0% financing accounted for those improved sales figures. Recognizing specific franchises for their outstanding customer service was another way in which to bolster slumping auto sales. Chrysler’s Board of Directors offered its highly coveted Five-Star Service Quality Award to those local distributors that had exceeded corporate standards in terms of automobile service.

A decisive slowdown in new car sales for both automobiles and pick-up trucks, during the summer of 1989, convinced Detroit’s Big Three to institute a number of hastily conceived cost-cutting measures. That included postponing several new car models scheduled to debut. In the case of Chrysler Corporation, its penny-pinching executives ordered temporary furloughs for many of their office workers. They said they would call them back to work once demand increased. Unfortunately, new car sales continued to fall into the 1990 model year. That led the Board of Directors to authorize a second round of employee furloughs beginning in January 1991. That latest round of job layoffs affected more than 3,000 employees. [25]

Massive employee furloughs had saved the Chrysler Corporation approximately $3,000,000,000 out of an estimated budget of $30,500,000,000. Across the board cuts, like that, may have seemed especially unfair to those affected by them especially when considering that the number three Detroit automaker had posted Fourth Quarter earnings in 1990 that exceeded $31,000,000. However, in retrospect, it made perfect sense given their dire economic situation as the number three domestic automaker entered the last decade of the 20th century. Company officials also fully acknowledged that they could not undergo any further layoffs if they wanted to remain in business. Reducing the size of Chrysler’s corporate staff, through temporary furloughs provided their strategists with valuable time in which to develop a more cost-effective way of operating their business. The stringent measures they initiated, in the early 1990s, represented important first steps towards recapturing that company’s fair share of the domestic auto market. They did not come any too soon.

The extraordinary sales success enjoyed by Chrysler’s minivans diminished by the early 1990s. In fact, 1991 signified the worst year for domestic new car sales in nearly a decade. [26] Analysts could not figure out exactly why this was happening since Detroit’s Big Three were manufacturing some of the best vehicles ever. Clever advertisements such as Ford Motor Company’s “Quality is Job One” and General Motors Corporation’s “Mr. Goodwrench” campaign had reflected a renewed sense of pride that Detroit wanted to share with its many customers. Apparently, that salient message did not totally reach the buying public as new car sales continued to fall. In Chrysler case, sales plummeted by 11.2% from 1990 to 1991. [27] With the purpose of reversing those losses, a high profile group of prominent leaders that embodied the best of Detroit’s Big Three accompanied President George H.W. Bush on a state visit to Japan in 1992. They wanted to obtain a number of trade concessions something that government had been reluctant to do recently. [28]

Hoping to eliminate what many perceived to be blatant business discrimination leveled by Japan against Detroit automakers led these same leaders to lobby for a new federal loan package that would enable them to open domestic dealerships throughout Japan. These three leading auto producers also pursued the idea of offering tax credits for Japanese companies who wanted to buy large amounts of domestically produced vehicles, accessories and auto parts. Detroit’s leaders tried to sweeten the deal even further by asking Washington for a 15% tax write off for Japanese-owned businesses that regularly purchased domestic made vehicles. These skillful leaders also requested $2,000,000,000 in federally backed, low interest loans for a number of joint ventures intended to reduce smog, improve fuel conservation and introduce new auto-related safety devices.

The buying public’s attitude towards domestic automobile manufacturers and their dealerships markedly improved over the next several years. It began when many affiliates modernized their facilities. That effort included adding the latest diagnostic equipment and most technically sophisticated machinery to their many repair shops. An informal survey conducted by a Cincinnati, OH marketing firm, in 1993, indicated that nearly 80% of domestic car owners were impressed with the new customer service that they were now receiving from their local dealerships. Given the fact that most distributors were losing approximately $22 on each new automobile sold meant that they must provide top quality repair service if they intended to cover their growing deficit. [29]

Offering extended warranties along with other, equally rewarding factory incentives represented a direct way in which to ensure that new car owners would continue to have their vehicles serviced at their local dealerships rather than at other, non-affiliated neighborhood garage or regional service centers. The long-term economic survival of domestic dealerships depended on much more than just high quality car service. [30] New training sessions subsidized by domestic carmakers and the NADA, throughout the 1990s, focused on a wide range of other critically vital issues. They included ethics and law, better sales methods and effective repair methods. By the mid-1990s, over 800 representatives from more than 80 dealerships had participated in those strategic sessions. Chrysler board members took their newest business insight to an even higher new plateau by insisting that their many sales persons learn every detail regarding their newest models. These executives fully understood that today’s buyers were far more conversant when it came to their latest offerings than had been the case in the past. That meant that their many representatives must be able to answer nearly any question a customer might pose regarding a vehicle that he or she was thinking of purchasing.

By the mid-1990s, increasing domestic new car sales meant more intense training sessions targeted specifically towards their sales professionals. The never-ending quest for repeat business was essential if any of the recent sales gains were to have any long term, positive impact on the industry. Detroit’s Big Three fully recognized that the future prosperity of the domestic auto industry rested on a profusion of well-trained sales persons. Not only did those spokespersons represent a specific dealer and carmaker; but also, directly symbolized the community they served. The saturated domestic car market of the late-1990s required people well versed in what consumers truly wanted and needed. The plethora of new makes and models mandated it.

Domestic automobile producers had to act in accordance with these important changes. That meant, among other things, that sales representatives must be encouraged by the corporate leadership to remain within the fold. A fast-evolving domestic market scene fostered unparalleled innovation throughout the field. This led Detroit’s Big Three automakers to adopt a radical new business approach when it came to distributing their vehicles. Few critics would have envisioned such a revolutionary move only a few years ago. The arrival of successful new superstores promoted that particular new strategy. Their desire to please their many customers by offering a host of exact new customer services as part of the distribution experience accounted for this spectacular shift in both policies and procedures by many long established dealerships. Those traditional outlets that enthusiastically embraced the new business concepts, as publicized by very innovative new superstores, naturally assumed that their all-encompassing new approach towards sales might well become the accepted norm industry-wide in the not too distant future. That assumption proved correct.

Of equal importance, such innovative actions inevitably resulted in greater operational efficiency overall. Those developments represented the best of both worlds wrapped up into one, neat business package. Recently, Ford Motor Company and General Motors had successfully marketed their-own brand of superstores to rave reviews. Situated in densely populated districts, these new superstores not only considerably increased the presence of those manufacturers locally; but also, drastically enhanced dealership profits within those districts. Being the number three Detroit manufacturer with decidedly limited resources, Chrysler decided to wait awhile before investing in this highly praised new business marvel. When the automaker finally got involved, it decided against building its-own new superstore preferring to purchase one of its chief competitor’s outlets. The superstore it bought had not previously been a highly respected Ford or General Motors dealership in a large city such as Chicago, Los Angeles or New York City; but rather, a lesser-known dealership in a smaller Southern community. In 1995, Chrysler awarded its first superstore franchise to one of its most staunch competitors, a CarMax dealership located in Norcross, GA. [31]

CarMax epitomized the quintessential independently owned and operated dealership at the turn of this century. Founded in 1993 by a very popular appliance chain called Circuit City, CarMax represented the culmination of an earlier effort by that growing retailer to diversify its vast holdings. Under the watchful guidance of its Chief Executive Officer Richard L. Sharp, Circuit City opened a number of pre-owned car outlets under the CarMax name. A consistent sales champion, CarMax went public in 1997. Its first offering involved 43,700,000 shares at $10.00 a share. CarMax separated from Circuit City five-years later. At the time of the Norcross, GA deal CarMax officials made it quite clear to Chrysler’s Board of Directors that they had no intention whatsoever of altering their proven sales techniques. In fact, they believed that Chrysler Corporation could learn a great deal from them as to what constituted effective salesmanship.

CarMax sales representatives took great pride in their ability to assist their many customers when it came to choosing the right pre-owned car for them. They did that without placing any undue pressure to purchase something that the new owners might or might not want. Its super service and no haggle price policy had served CarMax dealers well from the very beginning. In fact, its sales associates refused to participate in what they called obstinate sales negotiation tactics. They just did not do business that way. CarMax remains a viable entity in the domestic auto business right to the present day. This overwhelming successful company, in 2013, created a $250,000 scholarship fund named after its founder Richard Sharp, [32] A Richmond, VA based company it sold more than 582,000 automobiles in 2015. With revenues exceeding $17,000,000,000 in 2017, this Fortune 500 Corporation runs approximately 200 stores nationwide. It is also a member of the S&P 500.

Setting aside the growing popularity of CarMax, other entrepreneurs in this field have also worked diligently to create their-own customer-focused pre-owned car shopping websites. Carfax signified one of the earliest success stories in that regard. Founded in 1984 by Robert D. Clark and Ewin Barnett in Columbia, MO, this online company dedicated itself to providing vital information on the history of more than 10,000 pre-owned vehicles. That particular online service furnished the local business community with a wealth of valued information. [33] Its importance as a website grew quickly once Carfax began collecting vital title information on a wide variety of cars, light trucks and vans found throughout the nation. This company took a leap of faith when, in 1996, it offered its buying public the same kind of detailed vehicle information. Impressed with Carfax’s highly innovative business style, R.L. Polk & Company purchased this up-and-coming company in 1999. [34]

Four-years later, IHS, a well-known information handler, bought it from Polk for $1,400,000,000. [35] IHS later merged with yet another highly respected financial data provider called Markit & Partners to become IHS Markit LTD. It offers a wide range of valuable services through its Carfax website that include detailed records on specific vehicle problems, car safety and auto reliability ratings. IHS Markit LTD also provides helpful reminders to its many customers regarding routine maintenance and federal safety recalls. A unique service called Carfax Used Car Listings, initiated in 2014, not only affords its many customers the opportunity of searching its website for just the right pre-owned automobile; but also, presents them with much appreciated information pertaining to a specific car’s history including any reported accidents. The Drivers Privacy Protection Act of 1994 prevents this online service from revealing any personal information regarding the vehicle’s history such as its former owner’s name, address or phone number. [36]

Another auto-shopping website known as Car-Gurus compares listings for both new and pre-owned vehicles. Established in 2006 by Langley Steinert, one of the founders of Trip, Car-Gurus initially served as a community-based blog that posted important questions and vital reviews about well-known dealerships, busy repair shops and popular car brands. The growing acceptance of this detailed blog, prompted in part by the many distributors who advertised extensively in it, encouraged the website’s original backers to expand both its dimension and focus. Its inclusion of car inventories brought together large numbers of potential buyers and dealers, many for the first time. Its uniqueness as a primary resource on pre-owned autos rests on its use of algorithms to not only analyze local dealers; but also, determine fair prices for the many vehicles featured on this particular website. This company also encourages free and open dialogue among recognized experts in the field who readily discuss a wide variety of important auto related issues daily.

Carvana represents still another vital used car option. Established in 2012 by Ernest Garcia and his son Ernie along with Daniel Gill, Benjamin Huston, and Ryan Keating, this special online service encourages its many customers to shop, finance and purchase their pre-owned vehicles through its easily managed website. During its first year in operations, Carvana earned $45,000,000. [37] This site depends on digital media and television commercials to promote its special services and offerings. Starting in 2019, Carvana began offering its many loyal customers the chance of trading-in their used vehicles for cash regardless of their condition. This popular online service truly embraces the entire car buying experience. It also offers a seven-day return policy. People purchasing a pre-owned car from Carvana may have their vehicles delivered to them directly, or they may pick them up at targeted vendor machines at designated locations.

As everyone involved in the automotive field freely admits, seeking out new car buyers while retaining loyal past customers has been the foremost economic priority of this industry from its inception. A second priority in the form of advertising has been an equally important part of this equation. When used to the upmost, advertising keeps the name of a specific domestic automaker fresh in the mind of its consumers. Without a doubt, repeat advertising, expounding the many advantages of a certain domestic brand name over its chief competitors, generates a large amount of return business for those companies who are successful in their endeavor. To illustrate this last point, if you want an affordable car then think Chevrolet or Ford if you desire a luxury vehicle then think Cadillac or Lincoln. Successful advertising reinforces those same business notions time-and-time again.

One advertising ploy to grow in popularity over the years involves imprinting company logos onto popular merchandise. Car owners prize such items. The idea of advertising one’s product through promotional merchandise is not new at all. In the early years, auto manufacturers relied mostly on printed materials to tout the fine qualities of the many vehicles they sold. Most often, that advertising translated into beautifully designed brochures, which sales representatives handed out, free of charge, to those browsing in their showrooms. Highlighted by beautiful drawings, glossy photographs and relevant information, describing the various cars featured in those flyers, these brochures often included their prices.

However, automobile companies rarely confined their promotional efforts to brochures. National advertising firms were anything but shy when it came to utilizing the latest media to promote their client’s automobiles. Beginning a century ago, major marketing firms arranged with top Hollywood film producers to feature one or more of their client’s latest autos in their full-length movies. For example, Max Sennett silent film comedies put the popular cars, of that day, through excruciating chase scenes and horrific crashes using the streets of Los Angeles, CA and the byways of the San Bernardino Valley as their backdrops. Flashy cars adorning popular movies undoubtedly stimulated a great deal of new business for participating automakers. After all, customers wanted to drive the best and newest autos available. It gave them a great sense of pride to do so. The same held true for television where beautiful new cars appeared repeatedly in commercials and popular shows. Comedy shows on both radio and television often made fun of Detroit-made vehicles. Who could forget Jack Benny and his frequent jokes about his good old Maxwell? Radio jingles sung by popular celebrities of an era also helped the cause by repetitively publicizing the many advantages of owning a specific car brand and having that vehicle properly serviced at one of that company’s nearby affiliates. Remember Dinah Shore singing perhaps the most important television jingle of all times “See the USA in your Chevrolet, America is Asking You to Call.”

The placement of corporate logos to advertise a particular domestic car company grew in popularity during the post-war years. Detroit’s Big Three placed their logos on a wide range of merchandise ranging from coffee mugs and lapel pins to baseball caps and small toy cars. Expensive toy versions of American popular cars enabled some lucky children to peddle up and down their favorite neighborhood sidewalks in some of the most fashionable autos of the era.

1950s Kids Car
1950s Kids Car

Car-related gimmicks, in all shapes and sizes, remain popular to the present-day. Major domestic manufacturers including Chrysler Corporation continue to advertise their many car models in that way. [38] Current paraphernalia ranges from baseball hats and large coffee mugs to coloring books and stuffed animals often dressed in clothing that prominently display its logo. These novelty items directly connect the buying public with their favorite carmaker. That proud business affiliation might engender some customer loyalty when it is time for that individual to either lease or purchase a new vehicle. Chrysler’s many affiliates have never lost sight of the importance of nurturing that specific connection.

Like its chief competitors, Chrysler fully acknowledged the importance of integrating the latest technological breakthroughs into its workaday world. The devoted leadership at their modern-day Auburn Hills headquarters has spent countless hours advancing new online services designed to promote their many vehicles. The company’s Executive Director of Sales and Marketing Operations Steven Torok, in 1997, pointed out that Chrysler Corporation had been actively engaged in overcoming the major glitches equated with its most up to date computer-generated technological systems. By the Millennium, much of the problem facing the number three Detroit automaker no longer involved assimilating modern-day computer programs and systems into its large corporate structure. Company executives had resolved that problem successfully. The issue facing its Board of Directors, at this particular juncture, extended far beyond simply mastering the latest computer-related technology. It focused on how lackluster sales had negatively affected the Dodge line of heavy trucks and pick-ups. Precisely, what steps must Chrysler Corporation take to better publicize the many economic and financial advantages of leasing or owning one of their many top quality trucks?

More than anything else, practical considerations determined truck choices. Individual buyer concerns ran the full gamut from weight classification and spring ratings to drivetrains and body styles. The problem that most concerned Chrysler board members, at the turn of this century, did not focus on the quality or value of their Dodge trucks; but rather, how they might better differentiate Dodge trucks from their many competitors. Chrysler Corporation needed to develop a software package that would promote its many high quality Dodge trucks and pick-ups to a large number of potential buyers successfully.

Putting aside this dilemma regarding the best sales strategy regarding Dodge trucks, nothing else seemed to stymying Chrysler from incorporating the latest computer-generated technology into its corporate fabric. With the assistance of the Austin, TX-based software company called Trilogy, Chrysler executives, in 1998, unveiled their latest software program. [39] This new platform took the guesswork out of buying an automobile. It enabled new car buyers to design their own-vehicles online and that included both heavy-duty trucks and everyday pick-ups. Relying on the most up-to-date product information and current price guidelines, the buying public could get the vehicle it wanted at a reasonable price. Featured on its website and in numerous showroom kiosks, this well-attuned software package eventually enabled the Chrysler Corporation to increase Dodge truck and pick-up sales appreciably by providing a host of new factory incentives engendered through its ever-expanding corporate computer-generated system.

The Millennium marshaled in a host of other equally innovative new business incentives for those wishing to purchase domestic automobiles, pick-up trucks, sports utility vehicles or vans. Same-as-cash offers, first available in the 1990s, continued into the new century. In addition, Detroit’s Big Three not only extended its 0% financing plan through 2002; but also, started offering other desirable low-interest loan packages on certain select vehicles. These enticing offers may have helped to stimulate new car sales; however, it did very little for their many repair shops. In fact, the percentage of new auto and truck buyers, relying on local dealers for daily maintenance once their warranties had expired continued to plummet. Many domestic car owners believed that it was far less expensive to have their vehicles serviced at neighborhood garages or regional tire centers rather than their local dealers. The limited coverage previously offered through traditional new car warranties as issued by Ford Motor Company and General Motors may have encouraged new car owners to think in that fashion. However, that did not apply to Chrysler Corporation. Its new long-term warranty coverage guaranteed repeat visits to locally based dealerships. Whether that would translate into additional business for dealer repair shops once those warranties ended had not yet been determined. However, its success may have helped to explain why its two chief rivals soon followed suit.

Apparently, extended warranties paid off well for Chrysler in other ways. In 2005, new car sales were 30% higher than the previous year. The decision by corporate leadership to re-introduce one-price deals proved equally successful along with other worthwhile new factory incentives in the form of sizeable employee discounts, large factory rebates and special discounts for American Automobile Association members. In addition, many customers liked the idea that the sticker prices found on their many vehicles did not fluctuate daily. Chrysler officials made it quite clear that they were willing to do whatever was necessary to bolster new car sales.

As was pointed out earlier, advertising lower priced new cars did not, in itself mean that the actual cost of driving that particular automobile off the lot was the same as the one quota in an advertisement. Hidden costs were frequently responsible for higher costs. Consumer advocacy groups for years had been warning the buying public about them. They most often appeared in the form of special extended car warranties, exclusive automobile finance packages and irresistible option packages. [40] Consumer spokespersons further cautioned potential buyers about what persuasive advertisers labelled come-ons. Come-ons most often involved highly desirable autos, trucks or vans that dealers suddenly advertised at remarkably low prices. Most of those unbelievable deals were very limited and included a host of stipulations. Customers wishing to take advantage of those rock bottom prices had to accept the many, previously unspecified, business terms involved in that kind of sale. Buyers must also sign immediately on the dotted line before the offer disappeared.

Those agreeing to such deals had very little time in which to scrutinize the fine print found in those contracts. Those details hidden in the fine print spelled out all the additional expenses and requirements that were now the responsibility of the new owner. Heavily laden restrictions, such as those, would undoubtedly take much of the luster off those alleged great deals. At the beginning of the 21st century, consumer advocates offered the following cogent advice to all prospective new car buyers. If you need a new auto now then buy it now; however, if it is not a pressing issue then you might want to wait awhile for possibly an even better deal.

Business conditions for both Chrysler and General Motors steadily worsened during the first decade of the 21st century. Decreasing new car sales forced Chrysler Corporation to fill for bankruptcy in 2009. Part of the agreed-upon restructuring plan called for the elimination of nearly 800 dealerships throughout the nation. [41] That resulted in Chrysler, in May 2009, ordering the closing of three Cleveland dealerships owned by Tom Ganley and five distributors belonging to the Spitzer family. Final plans called for the Chrysler Corporation to eliminate 44% of its Northeast Ohio franchises. However, state franchise laws prevented major carmakers, including Chrysler, from arbitrarily exercising that most unpopular business option. Recognizing the dire economic straits facing Detroit’s third largest auto manufacturer, the federal courts overruled state franchise laws. The courts determined that by reducing the number of dealerships locally, Chrysler’s board might find itself in a much stronger financial position when it came to offering financial assistance to its remaining equally hard-pressed distributors. Outspoken critics of that decision contended that President Obama’s Automotive Task Force had compelled executives at Auburn Hills to decrease their number of affiliates rapidly. The Chrysler Board of Directors denied such allegations by claiming that the decision to close those distributors had come from their headquarters and not federal overseers.

Reducing the number of automobile outlets, at that time, might have made good financial sense for this economically strapped auto company. However, it did very little to repair its already tarnished business reputation. Being able to repair a car easily had always been one of the economic advantages of owning domestic vehicles, and Chrysler Corporation had always taken great pride in its high quality service departments. Decreasing the number of domestic outlets, especially in more remote areas, might make it next to impossible for those customers to find the necessary parts or receive the proper service quickly. If that persisted long enough, neighborhood garages and nationally advertised tire centers would experience a great surge in business due to the elimination of so many local affiliates. That might prove particularly favorable to domestic new car owners who prefer to take their vehicles to independent garages rather than depend on authorized dealers for service.

However, preferring to utilize non-affiliated garages and independent service centers for all schedule maintenance still under a new car warrantee, instead of relying on certified dealerships to perform the necessary work, might pose some distinct problems. Independent garages and service centers might decide to charge full price on all work performed on those vehicles simply because they are either unable or unwilling to honor those new car warranties. The reasons prompting such action may vary depending on the service center involved or the service performed. However, one might rightfully assume that those specific independent agents either do not have the time or lack the inclination to seek the reimbursement owed from Detroit’s Big Three for repairs they have done on those new autos. A complicated process to begin with, it might take weeks, even months, before an independent garage or service center would receive full reimbursement for car services rendered. Automotive experts warned that cutting back on the number of dealerships so quickly might briefly benefit the car manufacturer by temporarily increasing the new car sale volumes for the remaining dealerships. However, over the long run the lack of sustained dealership competition, within smaller geographical districts, might have just the opposite effect in terms of the percentage of profits gained and losses sustained. It would eventually lead to much higher automobile prices, which, in turn, would result in a slump in new car sales for the remaining distributors. That gloomy economic forecast did not bode well for Chrysler Corporation as it entered the second decade of the 21st century. Yet, that automaker proceeded ahead with its plan.

The second decade of the 21st century saw the debut on a more streamlined Chrysler Corporation. Increasing new car sales prompted by its popular SUVs made the number three domestic automaker a major contender again. Characterized as a time of major innovation for the Italian based Fiat Motor Company and its latest subsidiary Chrysler, this international automobile manufacturer broadened its North American customer-base. Chrysler executives set upon their latest assigned task by introducing a wide number of new factory incentives. They hoped that these new incentives might not only entice more customers to purchase their various offerings; but also, ensure repeat business in the years ahead. That line of thinking led Chrysler to redirect its attention away from its underperforming 300 sedan series towards its more successful 200 brand. The highly competitive nature of today’s automotive industry requires that kind of insightful, quick thinking. The more sophisticated buying public demands it.

One new promotion to gain the public’s attention recently is the “Drive Plus” MasterCard. It affords a variety of factory incentives not readily available through other credit cards. For example, it offers $100 cash back with the very first Chrysler product purchased. Additionally, it provides special financing of 0% intro APR for the first six billing cycles, and it includes all Chrysler car purchases that exceed $499. This card also gives its holders additional rewards. They include such things as cash backs, gift cards for dealership services and credit that goes towards buying another Chrysler product in the future. Those customers choosing to lease or purchase Chrysler hybrids are entitled to special federal income tax credits of $7,500 per vehicle, while honorably discharged veterans qualify for an extra $500 in cash bonus on selected models.

The Chrysler apparel line has also expanded in recent years to include a wide assortment of desirable merchandise. Those items cover the gamut from T-shirts, sweatshirts and casual shirts to sweaters, fleece jackets and caps. Other collectables include such things as down blankets, lunch coolers, pens, phone holders, totes and umbrellas. That kind of promotional merchandise, along with more versatile automobiles and trucks, have enabled Chrysler Corporation to compete more successfully in an expanding global market scene that experiences changes daily.

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