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Chrysler Aims To Eliminate 789 Dealerships
Restructuring Move Would Cut 25% Of Automaker's Dealers

POSTED: 7:07 am MST May 14, 2009
UPDATED: 7:45 am MST May 14, 2009


NEW YORK -- Chrysler LLC has told a bankruptcy court it plans to eliminate 789 of its dealers -- or about 25 percent of them -- across the country as part of its restructuring process.

The automaker has about 3,200 dealers but says that's too many. It wants to have stronger, more profitable dealers with better facilities.

Chrysler spokeswoman Kathy Graham says the company will notify specific dealers before commenting publicly.

The dealers likely will have a right to appeal to get off the list. The move could have a devastating impact on cities across the U.S., costing jobs and tax revenue.
 

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Now is the time that those non-5 star dealers are beginning to worry.
 

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Sadly, this is what needs to be done to help keep Chrysler (and GM and Ford) viable. The domestic dealer network is bloated and a remnant of the mid-20th century business/marketing model, and is kept alive by state dealer franchise laws. Most people now don't have any loyalty to a local dealer as they can buy the same car from any dealer nationwide, and have it serviced locally.

One option would be to continue to maintain a larger network of brand specific service departments without an attached showroom for warranty and other work, or have an attached virtual showroom without inventory. That woudl cut costs on both ends tremendously while still providing a sales and service point, as well as keeping current employees working.
 

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Everyone knows of that one good dealer near to them, THAT ONE is the one that is going to stay. The dealer I do business with has recently consolidated but they are the good one in our area. It is now Smith Chrysler, Jeep, Dodge, Ford. There was one in Clinton, NJ and they were such a bad dealership they had closed down because of lack of business long before the economy went down. The only other one around is Flemington but they are not know for good customer service or sales but they are owned by a large car dealer group so they may be able to survive the cuts. I think it is good that they are cutting some dealers. I don't know why there needs to be 2 or 3 dealers in one town for each automaker. It is not like you are buying a car once or twice a week. When the time comes that you have to buy a car or get service you may have to drive a couple extra miles but I think it will make the dealerships much better.
 

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I'm really confused with this approach.
Regardless of the number of dealers, it does not cost the manufacturer any real money.
The dealer must pay for special tools, special equipment etc.
It is not provided by the manufacturer at no charge, it is a pass through expense.
Same goes for advertising, it is a dealer expense.
So, if there were 4 dealers in a 40 mile radius selling 25 cars each a month, and now there is 1 dealer in that radius selling 100 cars a month, how does that help the manufacturer?
Same goes for parts volume to the service dept.
There is no way a service dept. can absorb the 3 lost dealers worth of mechanics, so now it will become harder to get service done in a timely manner.
Also, because there is now 75% less competition in the area, the remaining dealer will be less inclined to deal on the merchandise.
I'm confident the loss of dealers will further erode the already weakened sales tax base.
Hell, I could go on and on.
Regarding poor dealer operations, the market place has always succeeded in thinning out the bad ones anyways, and, if the one good dealer gets axed because of poor sales penetration or high warranty expense because he tried to help his custumers............
That is what will occur though.
The average dealer employs about 20 people.
800 x20= 16000 people added to the jobless table.
I think the trickle down effect is going to be HUGE!
And, we haven't added the G.M. dealers into the mix.
That will be tomorrow, and much higher than 800.

Methinks we are in for a gigantic surprise that we're not gonna like.
Rob
 

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They are closing one by my area and I hope they have liquidation prices.
 

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They are closing one by my area and I hope they have liquidation prices.

We have 4 Jeep/Chrysler/Dodge Dealers in South Bend (we had 5 but it closed last year) and it is so weird what is happening.

One of them that also sells GM, will only keep Chrysler and their sister store only keeps Jeep.

One of the mega dealers is getting rid of all Jeep, Dodge, and Chrysler and having amazing deals, and publicly announced they will take a loss on the vehicle just to get rid of it.

The fourth only sells Dodge and Jeep and is keeping both.

(There are about 4 or 5 more Jeep dealers in surrounding the area, I just dont know what is happening to them.)
 

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I read in this mornings paper that we are losing 5 in Arizona, they have 30 to 60 days to wind down their business.

Chrysler prohibits them from doing warranty work and will not buy back any vehicles, parts or special tools.
 

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Maybe this is a final in your face UAW move. Setting the new controlling share owners up for failure? Seriously no union has business owning or having controlling shares in a business that employs their union peeps. But it will be interesting when the workers want to strike and the union says no.
 

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I had a call this afternoon from my local Jeep dealer... Grubbs Jeep in Fort Worth. They said they are losing their Chrysler Jeep franchise (they are a Nissan dealer also) but said they remain strong and determined to deal with the service of any Jeep or Chrysler vehicles that are maintained at that location...

Don't know how this will affect me, that's where I have had all my warranty work done so far.

My factory warranty is up in 8000 miles/9 months... and my extended warranty is through Lincoln/Mercury (that's where I bought it used)... so it'll be interesting how things pan out.
 

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Per the franchise terms, once your Jeep dealers franchise expires (all affected franchises will end on June 9 2009) they will no longer be able to submit warranty claims to Jeep.
So, CUPRA, you will have to go elseware for your base warranty service.
Your extended warranty can be serviced at any repair facility, dealer or independent, for its full term as long as the repairer gets authorization from the warranty provider.

Rob
 

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All of those dealerships will not keep their lots empty. They will fill them with Nissan, Toyota, Kia, Volkswagen and a host of other brands from overseas. There are dealerships that have been in business for 40 or 50 years and they employ thousands of people collectively. The foreign auto manufacturers are eating Kobe beef and toasting the Obama Administration. The U.S. will soon be depending on countries that hate us for EVERYTHING. So bend over America and grab your ankles because most of the money you spend for goods will soon be transferred overseas.
 

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AK?

Whats happening at the manufacturing end (unions) has absolutly nothing to do at the distribution end. Distribution is all privatly owned franchise operations.

Rob
Oh I know that... I just am baffled why we gave the unions controlling shares.
I guess its a faster death so Toyota and Kia can rule the world muhuha *cough*

AS for the dealers I am baffled because from what I understand the dealer pays for the right to be a jeep/dodge/chrysler dealer. Only thing I can see that would stop costs toward the manufacturer from the dealer end is warranty work.
 
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