Liquidation prices don’t bring end to haggling

Bob and Debbie Roberts walked the car lot Monday at United Jeep Chrysler dealership in Las Vegas looking for one of those great deals they saw advertised on television.

"You put down a number and no reasonable offer will be refused," the sales manager says in a commercial disguised as a news story about the forced liquidation of $20 million in inventory at United Jeep Chrysler and United Dodge.

They're among nearly 800 Chrysler, Jeep and Dodger dealerships nationwide that were told their franchise agreements were being terminated by the bankrupt automaker. After today, the dealerships will not be allowed to offer Chrysler financing or incentives to potential buyers. Any vehicles not sold by Wednesday will either go to auction or be purchased by other dealers.

How about $16,000 for a fully-loaded 2008 Chrysler Sebring convertible? That sounds reasonable to Bob Roberts. The manufacturer's suggested retail price is $35,000.

"Their best (price) is $24,000. It's not bad, but it's not liquidation," Roberts said. "If they're serious about selling their inventory and closing their doors, you'd think it'd be at least half off."

Anything around 70 cents on the dollar would be considered a reasonable offer, said Don Forman, chairman and chief executive officer of Forman Automotive, owner of several United dealership brands in Las Vegas.

"Because of the fact we're in a fire-sale situation, rather than take the risk of selling at 50 to 60 cents on the dollar, we determined we'd pass those savings on to the customer," Forman said. "Our goal is we have another day to sell. We really don't know what they'll sell for after June 10."

Understanding the dealer's cost structure is essential to negotiating the best deal. The manufacturer's suggested retail price, or "sticker price," is marked up by an average of 13.5 percent from what the dealer paid for the vehicle, according to AAA automobile club.

For example, the sticker price for a 2009 Chrysler 300 touring sedan is $30,685, according to a price report from TrueCar.com. The factory invoice, or what the manufacturer charges the dealer for the car, is $29,524 and the actual dealer cost is $28,228, including $460 in manufacturer fees and $750 destination fee.

A good price for the car would be $608 below invoice and a great price would be $1,215 below invoice, TrueCar.com reported.

Since Chrysler's May 14 announcement that it would close roughly 25 percent of its dealerships, United has reduced its inventory from nearly 700 new vehicles to under 100, Forman said. To sell more than 500 vehicles in three weeks is pretty amazing, he said.

"We looked at our inventory on May 14 and thought it would take an act of God to get rid of these cars. We spoke to the public through our advertisements and got the employees rallied and actually accomplished the task," Forman said.

Forman said he's not totally clear about Chrysler's plans for the remaining cars, whether they'll be under warranty or whether they'll be sold at other dealerships.

Chrysler announced last month that would cancel franchise agreements with Jim Marsh Chrysler Jeep at 8555 W. Centennial Parkway, Towbin Dodge of 275 Auto Mall Drive in Henderson, Chapman Dodge at 3175 E. Sahara Ave., and Chapman Chrysler Jeep at 930 Auto Show Drive in Henderson. Another local Chrysler dealer, Integrity Chrysler at 6770 Redwood St., had already said it would shut down because of poor sales.

Meanwhile, the showroom at Chapman Chrysler Jeep Dodge on Boulder Highway is closed and the inventory of about 80 cars is being moved to another Chapman dealership on Sahara Avenue, a salesman who requested anonymity said. Only the body and parts shop remains open.

Why Chrysler chose to close United but keep Chapman and Towbin dealerships in Las Vegas is the million-dollar question, Forman said.

"Chrysler used some matrix to determine who's to stay and who's to go, and the fact is we recognized that there was really no matrix. It's some agenda that we don't know about," he said.

Chrysler officials said franchise agreements were terminated because the dealers were not profitable, didn't have all three brands or were too close to other Chrysler dealers. Sales activity did not justify a network of nearly 3,200 dealers, the automaker said.

Forman said he's come up with a plan to retain all or a majority of the 160 employees at the closed dealerships and morale has been good.

"It's a tragedy that we're going through this, but I'm very optimistic about the future of the car business and our plans for our facilities," he said. They may open under a different manufacturer brand.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.