Automotive News Canada - January 2020 - 19

* J A N U A R Y 2 020

Some FCA dealers take extra inventory, others won't be told
CONTINUED FROM PA GE 1

that the change essentially
forces them to take unwanted
inventory in a declining market to keep advertising support
that they view as critical.
One FCA dealer, who asked
not to be identified, said his
store has taken on an additional two months' worth of vehicle
inventory, after initially being
asked to take on about three
months of inventory. He said
he has spoken with other dealers who have also added about
two months of inventory after
negotiating that figure down
from three months.
To move that extra metal, he
has had to offer deep discounts.
"We are just trying to blow out
the inventory. Can't afford to
pay interest on it and move it
all winter with risk of damage,
etc."

'PLAY BALL'
Dealers who spoke on the
record shrugged off the move
because the support programs
are not as crucial to their
stores and they could absorb
additional inventory, while
others said they were unaware
of any changes to the co-op program.
Shahin Alizadeh, CEO of
Downtown Auto Group, which
owns an FCA dealership in
Toronto, said FCA might be
using co-op support as a way of

We tend to stock enough
[vehicles] anyway,
but no one has actually
turned a screw to us yet.
TRENT HARGRAVE

General manager,
Riverside Dodge,
Prince Albert, Sask.
getting dealers to "play ball" on
inventory.
"Some of these brands seem
to have a very specific co-op
program, and generally, they
don't screw with it," Alizadeh
said. "But Chrysler seems to be
a bit of an anomaly."
Alizadeh stressed, however, that he was pleased with the
product allocation assigned to
his group.
Automakers typically offer
advertising co-op support to
help dealers pay for ad campaigns and marketing programs. The structure of co-op
programs varies from automaker to automaker.

'ALL-OUT PUSH'
The policy change comes
amid media reports that FCA is
pressing its U.S. dealers to take

CLASSIFIED

on more inventory. Bloomberg
News reported on Dec. 20 that
the automaker was "making
an all-out push" to clear tens
of thousands of vehicles that
went unordered by dealers by
offering "its most aggressive
discounts since the financial
crisis."
Citing "a person with
knowledge of the matter,"
Bloomberg reported that FCA
had about 70,000 vehicles in
excess inventory at one point
in December, though that figure dropped to 25,800 vehicles
the week of Dec. 15. FCA representatives were working overtime to urge dealers to take on
more vehicles to drop that figure further, according to the
report.
However, the company
denied it was using dealers
to clear an inventory glut.
Instead, FCA said it put a predictive analysis in place to better align its supply chain and
manufacturing plans with
anticipated dealer orders,
according to Bloomberg.
Sibling publication
Automotive News reported on
Jan. 13 that the automaker was
trimming output at four of its
assembly plants, including the
minivan factory in Windsor,
Ont., to reduce inventory levels. It reported that FCA was
working through a backlog
of unordered vehicles that
it attempted to unload onto

dealers in the United States
with incentives that by late
December rose to as high as US
$3,000 ($3,913).

'I WANT TO SELL CARS'
Bill Johnston, vice-president of Johnston ChryslerDodge-Jeep-Fiat in Hamilton,
Ont., said he has not taken on
unwanted inventory.
"I do my forecasts every
month," he said. "As a manu-

Dodge dealer Trent Hargrave
from Prince Albert, Sask., has
felt no pressure from FCA to
take on additional inventory.
P H O T O : G I A N C A R L O PA W E L E C

facturer, they want to sell cars,
and I want to sell cars. It's been
a great year as a Chrysler dealer."
Trent Hargrave, general
manager of Riverside Dodge
in Prince Albert, Sask., said
he has felt no additional pressure from FCA to take on more
product.
"We tend to stock enough
anyway," Hargrave said, "but
no one has actually turned a
screw to us yet."
Managing inventory is
particularly important in a
new-vehicle market that saw
sales fall 3.6 per cent in 2019
compared with a year earlier
to 1.92 million units, the second
straight year the market failed
to reach two million units. FCA
Canada sold 223,686 units, a
0.9-per-cent drop from 2018.
Canadian inventory figures
were not readily available. In
the United States, FCA inventory stood at about 590,000 vehicles as of Jan. 1, according to
an estimate by the Automotive
News Data Center in Detroit.
The data centre defines total
inventory as the number of
"vehicles on hand at dealerships, factory lots, ports of
entry and in transit on a specific date."
It would take FCA about 75
days to sell that American supply, down from 82 days on Dec.
1 and 88 days on Nov. 1.
- ANC

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Automotive News Canada - January 2020

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