Thursday, 14 May 2009 06:45

Over 100 Chrysler dealerships 'not going down without a fight'

Chrysler announced May 14 that 789 dealerships would be officially off the books as of June 9, 2009, but over 100 of them have already recruited counsel to oppose their franchise's termination. One attorney was quoted as saying a grass roots opposition campaign would work, and was being pursued by the terminated dealers.

The Committee of Chrysler Affected Dealers, in cooperation with the National Automobile Dealers Association (NADA, see statement made May 14 ), addressed dealers in an informational teleconference today. The dealers will be represented in U.S. Bankruptcy Court in New York by the Cincinnati law firm Squire, Sanders & Dempsey.

Chrysler said that more than 80 percent of the dealers being eliminated sell more used cars than new and could look to stay in that business. Almost half of the rejected dealers sell fewer than 100 new vehicles per year.  The dealers that have been listed account for 14% of Chrysler's sales. In 2008, Chrysler’s dealers sold 1 million vehicles through 3,298 dealers, or 303 per dealer. By comparison, Toyota sold 1,292 per dealer and Honda 1,219, the company said.

80 percent of the remaining dealers will carry all three brands, compared with 62 percent currently, the automaker said in court filings. That will help meet the goals of Project Genesis, the 2008 strategy to put the brands in the same showrooms.

Chrysler has not provided an appeal process for the closed dealers.

James T. Anderer, of Island Jeep, in Lindenhurst, NY, said he was "courstesy" called by his zone manager who said Chrysler was "not moving forward" with his dealership. Anderer said he was not going down without a fight.

Jeff Duvall, co-owner of a dealership in Clayton, Georgia, said he’ll oppose Chrysler’s request in court with other dealers. “I’m furious. I’m beyond furious,” said Duvall. “You mark my word, I’m going to fight it tooth and nail. We just opened less than a year ago, and we’ve spent thousands and thousands of dollars on architecture plans and engineering plans and we were about to start construction on a new facility.”

4,000 units are in rejected inventory. 4,000 are 2008 models. 40,000 are 2009.  The 2009 models will be redistributed in the next four weeks, said Chrysler.

Jim Press, Chrysler's vice chairman and president, said “With the downsizing of operations after the sale and reduction of plants and production, similar reductions must be made to the size of the dealer body.”

“Is there a more humane way we could do it? No,” Press stated on a reporters conference call. “There is no way to say anything but that it is a sacrifice that is for the good of the total.”

The U.S. Treasury, which agreed to provide more than $11 billion in financing for Chrysler after its April 30 Chapter 11 filing, did not endorse Chrysler's specific plan to eliminate a quarter of its 3,188 dealerships. It said the government had no role in deciding which dealerships, or how many, would be eliminated.The U.S. Treasury Department called the sacrifices by Chrysler’s dealers and other stakeholders “necessary for this company and the industry to succeed.”