Back in Business

Elliott is an industry stalwart having spent 27 years in the sector starting as a sales adviser with Volkswagen and Audi. He joined Toyota in 1988 as a zone sales manager and worked his way up to director of corporate sales in 1995. He moved to head up Chrysler in the UK in 2000 when the company was merged with Daimler and the operation moved from Dover to Milton Keynes. He also introduced the Dodge brand in 2006.

Since the de-merger of DaimlerChrysler at the beginning of the year, the brand continues to be based in Milton Keynes, although it has physically moved away from Mercedes and occupies its own wing in the same building. Some back office functions, including IT and finance, are still shared and will continue while the companies work through a transition plan.

Annus horribilis

Last year proved to be the franchise’s annus horribilis with Chrysler sales falling 21 per cent to 9,131 units and Jeep slipping 9 per cent to 6,148, while the fledgling Dodge brand grew, albeit from a low base, by 51 per cent from 2,162 to 3,273 units. Elliott admitted that too many dealers lost money and the brand’s ratings hit rock bottom in the RMIF’s NFDA Dealer Attitude Survey.

Elliott expects similar volumes this year as the brand consolidates its operations and lays the ground for increased profitability in the network.

“There’s no point in continuing a strategy of achieving volume at all costs because most of that cost will be a loss of dealer profitability. All of the business we wrote in March was natural without any force behind it,” he said.

Turning point

Indeed March could be the turning point for the group with its Dodge brand proving to be its surprise saviour. Combined sales for the three brands hit a record 4,010 with the Caliber the best seller (710 units) and the Nitro (436 units) in fourth place – less than 40 units behind the Chrysler 300c.

“When Chrysler and Jeep originally launched in the UK in 1993 we sold just 3,914 vehicles in a full year. To sell more than this in just one month is a significant achievement for our UK business and I am very proud of the tremendous effort made by our dealer network. This is a fantastic start that gives us something to build on for the rest of 2008 and beyond,” said Elliott.

Since returning to the UK Elliott said he has identified improving dealer profitability as his main objective and to achieve this he said the brands need refocusing.

“We need to rebuild our brands. Customers must want our products rather than the dealers registering cars to themselves and then selling them as cheap nearly-new deals,” he said.

Elliott admitted that some dealers in the 83-strong network had a torrid time last year and were in the process of exiting.
He does not plan to grow the network this year but expects to recruit new partners to replace departing ones.

“A small number of dealers lost their appetite for Chrysler Jeep and Dodge because in 2007 they lost unacceptable levels of money. We’ve had conversations with them about not wishing for that to continue and we will probably extract ourselves from those relationships. Equally there are a number of dealers who made good profits in 2007 and who want to expand with us.

“What we need to do is make sure our dealers make more money so we need to work with them to make sure their cost base is appropriate. We want them to be able to invest and enjoy the fruits of their labour. For the past few years they have been working hard but market forces and our strategy has not helped them.

“Two years ago we were fifth in the RMIF dealer survey – now we are 32nd. We have to listen to the dealers. There are some dealers who want to have conversations with me about where their future lies and whether there is a sustainable future for them with a ChryslerJeepDodge dealership. There are also some dealers where we have mutually agreed that maybe they’re not right for ChryslerJeepDodge and we’re not right for them. Rather than having childish conversations we are having adult ones about how we can transition their business across to another partner,”
he said

Marketing push

As part of the relaunch process Elliott has told dealers to stop self registrations and invested heavily in marketing in the build up to the March plate-change to drive showroom traffic. Elliott said this was not a short term fix and would be continued over the coming months.

“What I want to do is drive profitability through the network and as a result of this I think by the end of Q1 we’ll be around 10 per cent up on last year. Dealers will see more customers and will do a better quality of business but one swallow does not make a summer and we have to continue this consumer driven programme into Q2 and beyond,” he said.

One of the first actions taken by Elliott upon his return was to reforecast the 2008 volume plan which he thought was too high and could not be achieved by a market led approach to sales.

“Pushing an unrealistic volume of vehicles at a market can only create ongoing residual values problems and dealers would feel the pinch in their used car stocks. We’re taking a more pragmatic view of what the market can sustain rather than what the business plan tells us we should sell,” he said.

Product cull

In tandem with this Elliott has moved to reduce the number of models dealers are expected to sell although he would not be drawn on how many would be left in the line-up.

“We currently have 21 models across three brands and I would like to see that dramatically reduced over the next 12 months,” he said.

Dealers will not be expected to stock hard and soft top versions of both the PT Cruiser and Crossfire or the short wheelbase Voyager which has effectively brought the headcount down by 25 per cent.

Dealers can expect to lose more models over the coming months although they’ll also be preparing for three additions in the shape of the newly launched Grand Voyager and a replacement for the discontinued Cherokee in July. There are also high hopes in the network for the September debut of the Dodge Journey, a crossover MPV in the spirit of Ford’s S-Max which will fill the gap left by the smaller Voyager.

He is also encouraging dealers to only stock cars they know will sell in their region rather than try to accommodate the entire line-up in their showrooms.

“By the end of the year I hope to be ahead of 2007 but I’m not driven by achieving it at any cost. If we have to take a step back in our volume to support dealer profitability and not force cars unnaturally into the market then I’m quite comfortable taking that decision,” he said.

“If 2008 volumes are better for Chrysler, Jeep and Dodge I’ll be delighted as it would mean it was a better year financially for the dealers and they are my number one concern at the moment,”
he said.