Stellantis (owner of Chrysler Dodge Jeep Ram) $STLA ( ▼ 5.25% ) updated its limits on how many dealerships dealers can purchase.
Driving the news: “Effective Jan. 6, dealers can now acquire only one CJDR store within a rolling 12-month period,” Stellantis said in a memo obtained by CDG News from within Circles.
The email sent around 8 a.m. EST also had an attachment dated September 2015 from the automaker reminding of other limits already in place.
No person or entity may own or control:
More than 10 CJDR dealerships in the United States.
More than 6 CJDR dealerships within the same Business Center.
More than 1 CJDR dealership in a Sales Locality that has 3 or fewer CDIR dealerships;
More than 2 CDJR dealerships located in a Sales Locality that has 4 or more CJDR dealerships.
A spokesperson from Stellantis declined to comment via email.
For context: The new limit comes amid Stellantis’ attempt to rebuild itself after a rocky period marred with issues including supply struggles and pricing problems.
It also arrives after Carvana started stockpiling its five Stellantis dealerships early last year.
Between the lines: One dealer thinks Stellantis hopes to help quell dealer frustration. Todd Edwards is a third-generation co-owner of his family’s Edwards Auto Group based in Council Bluffs, Iowa.
They own eight stores, including three selling Stellantis.
Edwards said some dealers may have concerns when larger entities are allowed to come swallow up multiple stores.
“The higher dealer morale is, the more likelihood that dealers will invest within that manufacturer,” Edwards told CDG News. “[They’ll] put good talent in that manufacturer, carry more products, have nicer facilities, and be an overall be a better dealer for that manufacturer.”
Staying competitive: Edwards said he enjoys a competitive playing field in the market and that this policy will help ensure fairness.
“Every dealer maybe dreams, ‘Man, it'd be nice if I owned all the points in my market,’” Edwards said. “But you don't get to do that. And this is Chrysler saying, ‘Here's our policy, and now we've got this new line in the policy: You gotta add one a year.’”
Other side: Several commenters on Car Dealership Guy’s LinkedIn post about the move were against it, including used car manager Scott Ognar.
“Does it really matter who buys the stores and how many[?]” he wrote. “If the stores are for sale and someone wants to buy it, let's make a deal. The sale will more than likely do better under new ownership resulting in selling more cars, everyone wins as far as I can see.”
Bottom line: Although January’s update only came with one real change to the existing policy, it seems to be a clear move to slow consolidation and keep the dealer network more balanced.
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