Forced to close

[Kratos]

NEW YORK - Chrysler LLC wants to eliminate roughly a quarter of its 3,200 U.S. dealerships by early next month, saying in a bankruptcy court filing Thursday that the network is antiquated and has too many stores competing with each other.

The company, in a motion filed with the U.S. Bankruptcy Court in New York, said it wants to eliminate 789 dealerships by June 9. Many of the dealers' sales are too low, the automaker said. Just over 50 percent of dealers account for about 90 percent of the company's U.S. sales, the motion said.

Dealers were told Thursday morning via United Parcel Service letter if they would remain or be eliminated. The move, which the dealers can appeal, is likely to cause devastating affects in cities and towns across the country as thousands of jobs are lost and taxes are not paid.

Chrysler spokeswoman Kathy Graham would not comment other than to say the company will notify dealers before speaking publicly. A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York to determine whether to approve Chrysler's motion.

Don Burk, co-owner of Heritage Chrysler Jeep in Ozark, Mo., said he found out that Chrysler plans to get rid of his dealership when he opened his UPS letter Thursday morning.

"Right now I'm processing the information," he said shortly after reading the letter. "I'm sure I'm going to get with my partner and we'll decide what to do from here."

The dealership, in a city of about 10,000 near Springfield, Mo., is involved in the community, sponsoring sports teams and even buying championship rings for the Ozark High School girls basketball team when it won the state championship several years ago, Burk said.

"If you're a good-sized business, kind of by default you're involved a lot," he said.

Chrysler dealerships aren't the only ones scheduled to get bad news this week. General Motors Corp. says it is notifying 1,100 dealers that it will not renew their franchise agreements when they expire at the end of September of 2010.

In its motion, Chrysler said it has many dealerships that sell one or two of its brands, with Chrysler-Jeep dealerships competing against Dodge dealers as well as other automakers' stores across the country.

"In addition, as suburbs grew and the modern interstate system continued to evolve, longstanding dealerships no longer were in the best or growing locations," the company said in its filing. "Many rural locations also served a diminishing population of potential consumers. Some dealership facilities became outdated. Other locations faced declining traffic count and declining populations."

Chrysler said in its filing that dealers are not competitive enough with foreign brands. Chrysler sold an average of 303 vehicles per dealer in 2008, according to its filing. By contrast, Honda Motor Co. sold about 1,200 vehicles per dealer, while Toyota Motor Corp. sold nearly 1,300 per dealer.

Chrysler said its dealer network "needs to be reduced and reconfigured in a targeted manner to strengthen the network and dealer profitability and to achieve optimal results for the dealers and consumers."

Chrysler has received $4 billion in federal loans and has been operating in bankruptcy protection since April 30. Its sales this year are down 46 percent compared with the first four months of last year and it reported a $16.8 billion net loss for 2008.

General Motors has a June 1 government-imposed deadline to come up with a viable restructuring plan or join Chrysler in Chapter 11 bankruptcy protection.

Dealers around the country are gearing up for a battle against the two automakers, but it's not clear how much power they'll have to save themselves. Legal battles with the dealers could delay Chrysler’s exit from a government-forced bankruptcy within the time frame of 30 and 60 days projected by the Obama administration.

Some Chrysler dealers who fear they will lose their franchises have formed a committee and hired lawyers. In conjunction with the National Automobile Dealers Association, a trade group, the committee has asked Chrysler dealers to contribute $4,000 each to a legal fund, according to news reports.

[Kratos]

Does anyone worry about the human element of a buisness closing on the ownership? Everything you've worked for being taken away with the stroke of a pen. Having no control over your financial fate despite what you've worked for. How does that car dealer feel the day they open that UPS package and it tells them they're all done, no more franchise...wait and watch the car carriers come in and take away your inventory. Watch your financing be pulled out from under you like a rug. Let everyone go to collect unemployement and liquidate what if anything you have left.

[TRT,MAN]

iv been seeing this on the news.its gettin bad, almost seems like the begining of the end. everybody is starten to lose their jobs including me. guess it makes more time for me to be on here lol.

[TRT,MAN]

i dont think people are really relizing on whats going on here. alot of people dont pay attention to whats going on in the world. to busy ingulfed in their night life texing on their phone and seeing how many times the can get laid for the week. and im almost a baller.

[vpchill]

Well, In my opinion chrysler has been doomed for a long time. I always wondered how they kept afloat. They dont market the vehicles very well. Think of where you see chrysler vehicles. Its almost always at renta a car locations. Not many commercials, newspaper adds. Then the rent a car places sell the rentals and if John Doe thinks the 300c was nice when he rented it, he goes and buys it. Turns out to be crap. Ive driven chryslers, known many who have owned.
The product quality has always been poor in this case.
JMO.
Though I think the whole situation is Bad in its entire form.

[SMCengineer]

Chrysler should've declared bankruptcy in 1979. Now, the situation is much worse and includes all three automakers because of the precendent set by that one simple act. This is the clear result of bailouts and government intervention.

[Kratos]

http://www.msnbc.msn.com/id/21134540...1085&#30761085

[Kratos]

Chrysler should've declared bankruptcy in 1979. Now, the situation is much worse and includes all three automakers because of the precendent set by that one simple act. This is the clear result of bailouts and government intervention.

It's my opinion Blome, and you can disagree since I have nothing to back it up...There was no Auto company bail out.

Bush wanted them to go bankrupt, but the dems were critical...so he gave them money for political reasons to hold them over until Obama was in office...therfore no longer making it his call.

It has been the position of the gvmt to prepare GM and Chrysler for brankruptcy rather then recovery since not long after Obama took office. The bankruptcy itself will be far more costly then then "bailouts".

http://www.huffingtonpost.com/2009/0..._n_180516.html


The banking industry has not been asked to hire or fire one exec. GM's long time CEO was castrated in public. A new CEO was put in place with the mission of speeding up the bankruptcy. No car company in their right mind not headed for bankruptcy, and being cash poor would be looking at their dealer network. It costs to freakin much to eliminate dealers outside of bankruptcy protection. They're taking care of long term goal business before entering protection, as eliminating dealers has no immediate effect on bottom line...and most likely hurts in the short term (decrease of represention in the market). Every dealer wants a multi-million settlement. GM will be in the same boat in a month as Chrysler. What do you think? Bailout? or bridge to bankruptcy?

[JiGGaMaN]

Well, In my opinion chrysler has been doomed for a long time. I always wondered how they kept afloat. They dont market the vehicles very well. Think of where you see chrysler vehicles. Its almost always at renta a car locations. Not many commercials, newspaper adds. Then the rent a car places sell the rentals and if John Doe thinks the 300c was nice when he rented it, he goes and buys it. Turns out to be crap. Ive driven chryslers, known many who have owned.
The product quality has always been poor in this case.
JMO.
Though I think the whole situation is Bad in its entire form.

yeah you are right the entire jeep brand (chrysler brand) was horrible. same with the dodge caravan, they never made record sales.... and the viper, dont even get me started. the dodge ram was a flop and the charger/challenger arent gonna sell squat.