Posted by: David Welch on June 13, 2006
Want another sign that Chrysler’s turnaround is on shaky ground? The company is losing marketing and sales execs as fast as President Bush loses cabinet members. The latest exec to leave is Gary Dilts, Chrysler Group’s Group Senior Vice President – Sales. Before that Jeff Bell, one of its top marketers, left for Microsoft. Bell has plenty of critics in Detroit. Some people considered him to be a glib self promoter. But he did come up with some innovative ways to push Chrysler brands using video gaming and the Web. He also did some nice work marketing the Jeep brand.
Dilts is a bigger loss. He had great relations with dealers, which is essential in the car business. If the dealers don’t like your company, good luck getting them to invest in new showrooms or hire the best sales people. That’s especially true since so many dealers now own multiple franchises selling many competing brands. Dealers say Dilts was one of their advocates at Chrysler headquarters in Auburn Hills, Mich.
They also say that Dilts just didn’t get along with his boss, Chrysler’s executive vice president of global sales, marketing and service Joe Eberhardt. Dealers complain that Eberhardt championed several sales initiatives that they couldn’t stand. The biggest one was a tried-and-failed Detroit strategy of force feeding the market. The Big Three love building as many cars as they can to keep plants running full tilt and then foisting them on dealers. At Chrysler, it’s called the sales bank, which is a euphemism for lots packed with cars that no one has ordered. Chrysler was constantly pressuring dealers to take more cars off its hands. They hoped dealers would sop up the excess inventory so the company wouldn’t have to cut production, which hurts profits. So long as the dealers took the cars and found some way—any way—to move the metal, Chrysler would still keep making money.
But these days, the build ‘em and push ‘em business strategy is running out of steam just like it did for General Motors about 18 months ago. It’s also the kind of tactics that got former Chrysler President James Holden fired a few years ago. Chrysler has cut production in the first quarter. But inventories remain high. Profits fell during the same three months and market share is down .3 points to 13.7% through May.
So did Dilts leave in a huff? Or was he forced out? Chrysler spokesman Jason Vines says that Dilts, who is a young 56, had 30 years in the car business. Selling cars is a high-stress job and he was ready to leave. That’s probably true. But let’s face it. Your job is even more stressful if you don’t see eye to eye with your boss. So the story dealers are weaving certainly makes sense. They say Dilts didn’t agree with the strategy and Eberhardt wouldn’t listen to him. So he left.
Chrysler has some experienced hands coming in to take over Dilts’s old job. Hopefully for Chrysler’s sake, former Chrysler Canada boss Steven Landry will bring some sense to the company’s sales strategy in the States. Maybe Landry can convince Chrysler’s top brass that pressuring dealers to take unwanted cars is short sighted. But don’t expect miracles. If a seasoned veteran like Dilts—who had almost unquestioned backing from dealers—couldn’t make changes, it will be tough for a new player to do it. Ultimately, Eberhardt is the one who has to get Chrysler’s retail performance headed in the right direction.