How will dealers 'dodge' teh ax?

Discussion in 'Bankruptcy' started by 'Teh' Fortisque Flatiron, May 14, 2009.

  1. Chrysler aims to close 789 dealerships
    Move could cost cities around the country jobs and tax revenue
    The Associated Press
    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 through United Parcel Service letters
    if they would remain or be eliminated. The move, which the dealers can
    appeal, is likely to cause devastating effects 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.
    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.
    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.
     
    'Teh' Fortisque Flatiron, May 14, 2009
    #1
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  2. 'Teh' Fortisque Flatiron

    PeterD Guest

    All I can say is I'm glad that Chrysler did axe the crappy local
    dealer at least! That's right, the dealer I got my Dodge Ram from is
    on the block, and I'm glad.

    Basically they screwed up so many things that I ended up paying for
    warranty repairs, their fault, and their attitude was "Screw you, we
    can do whatever we want..."

    Well, Mr. Local Dealer, enjoy...

    Oh, and the dealer I now go to (only a few minutes further away: they
    are not on the list, and I don't expect 'em to be! Great. One crappy
    dealer gone.
     
    PeterD, May 15, 2009
    #2
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  3. 'Teh' Fortisque Flatiron

    Electrician Guest

    Chrysler aims to close 789 dealerships
    Move could cost cities around the country jobs and tax revenue
    The Associated Press
    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 through United Parcel Service letters
    if they would remain or be eliminated. The move, which the dealers can
    appeal, is likely to cause devastating effects 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.
    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.
    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
    Chryslerâ?Ts 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.

    I guess what I don't understand is why closing dealerships is going to help
    Chrysler? My understanding is that Chyrsler doesn't subsidize the dealer,
    they just sell to them and reimburse them for warranty service. So doesn't
    less dealers mean less possible sales? It seems the dealership itself should
    decide whether they can afford to continue to sell Chysler products. But
    maybe I'm missing something since GM is doing the same thing.
     
    Electrician, May 16, 2009
    #3
  4. 'Teh' Fortisque Flatiron

    Tony D. Guest

    Because it means intense competition that makes prices fall, unsold
    inventories,etc. And the dealers are not exactly totally unconnected to
    the mfg. There are many financial intertwinings.
    The avg Honda or Toyota dealer sells 1300 cars/yr, Chrysler is like 308.
     
    Tony D., May 21, 2009
    #4
  5. 'Teh' Fortisque Flatiron

    lansing Guest

    Many point out the numbers of sales of Honda to Chrysler ??? Could the
    reason for that be the products Chrysler sells that lost them sales ??
    Nothing loves gas and repairs like a Chrysler rig...

    Lansing
     
    lansing, May 23, 2009
    #5
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