Cape Girardeau, Cairo, Ill., dealers among 789 dealerships Chrysler plans to close

Thursday, May 14, 2009
FILE - In this April 30, 2009 file photo, a customer looks at a Challenger R/T at a Chrysler dealership in Oakland, Calif. As Chrysler dealers across America try to sell vehicles with the manufacturer's bankruptcy filing hanging about, they're meeting a few different types of customers: loyalists who aren't fazed by the troubles, those simply seeking the best deal in a bad economy, and those willing to look but who aren't sold on the automaker's prospects. (AP Photo/Paul Sakuma, file)

LINK: Click here for a list of the dealerships.

Auffenberg Chrysler Dodge Jeep in Cape Girardeau, Lucas-Smith Automotive in Potosi, Mo., and Guetterman Motors of Cairo, Ill., are among the 789 US dealerships that Chrysler LLC plans to eliminate by early June, according to a list filed in court.

"I expected it," Jack Guetterman of Guetterman Motors said. "Since we sell other brands we'll be okay but for others the news is not so good."

Guetterman explained that his dealership also is a Ford, Lincoln and Mercury dealer and does not expect to lay off any employees despite Thursday's news from Chrysler.

"We're a small dealership and our other brands that we sell will keep us going," Guetterman said.

Like Guetterman Motors, Auffenberg is a dual-dealership, selling the KIA brand. In a statement sent to the Southeast Missourian, general manager Darrin Garner believes the list is only preliminary.

"We are working closely with the newly formed Chrysler to resolve this matter and any issues that may exist," Garner wrote. "It is our intentions to carry on with business as usual and we look forward to remaining a part of the Cape Girardeau business force for many years to come."

Lucas-Smith Automotive will also continue operating its Chevrolet dealership.

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 today 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 shed 789 dealerships by June 9. Many of the dealers' sales are too low, the automaker said, with just over 50 percent of dealers accounting for about 90 percent of the company's U.S. sales.

Dealers were told this morning through United Parcel Service letters if they would remain or be eliminated. The cuts are likely to devastate cities and towns across the country as thousands of jobs are lost and taxes are not paid.

Chrysler Vice Chairman Jim Press called the cuts difficult but necessary. He said the list of dealers is final and there will be no appeal process.

"This is a difficult day for us and not a day anybody can be prepared for," Press told reporters during a conference call.

A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York for the judge to determine whether to approve Chrysler's motion. Judges often rely on companies in bankruptcy to help determine what is in their best business interest, such as the closure of dealerships or cancellation of contracts.

Chrysler executives said the company is trying to preserve its best-performing dealers and eliminate ones with the weakest sales. More than half of the dealerships being eliminated sell less than 100 vehicles per year, they said, and account for 14 percent of U.S. sales.

The company is also trying to reduce the number of single-brand dealerships to bring all three Chrysler brands -- Jeep, Chrysler and Dodge -- under a single roof, they said. It also wanted to limit competing dealerships.

"We recognize in the short term we will see some loss of sales," Press said. "But based on the long term ... the dealer (network) is key and it's going to be very strong, powerful, with a much better financial viability."

The 3.5 million customers who purchased vehicles from the affected dealers will be notified about the closures and their warranties will still be honored, said Vice President Steven Landry.

Dr. Bruce Domazlicky, a professor of economics at Southeast Missouri State University, is uncertain when the car industry will turn around.

"Consumers have closed their pocket books to a lot of things," Domazlicky said. "They are building debt and the number of those unemployed continues to increase.

"It will be a slow recovery," he said. "Until you see the unemployment go down and other parts of the economy improve you won't see the car industry make a significant turnaround."

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.

"We understand there's going to be a consolidation of dealers, said John McEleney, a Clinton, Iowa, auto dealer who serves as chairman of the National Automobile Dealers Association. "We just think the process needs to be slowed down."

He said about 187,000 jobs could be lost from the closing of GM and Chrysler dealerships.

Even for dealers that were not included on the list, Thursday's news was not easy to handle.

"We're definitely not closing," said Kelly Walker of Morlan Dodge in Sikeston, Mo. "Beyond that I don't want to make any other comment. It's a real touchy subject right now. The dealership is their livelihood."

Chuck Eddy, a Youngstown, Ohio, Chrysler dealer, called the news heart-wrenching.

"I've grown up in this business," Eddy said. "My dad's been with Chrysler since '57. I've grown up with a lot of these families. That's all I've ever known -- Chrysler."

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.

Southeast Missourian business reporter Brian Blackwell contributed to this story.

Comments
Respond to this story

Posting a comment requires free registration: