Chrysler Closing Almost 800 Dealerships

By Alan Stewart Carl | Related entries in Business, Cars, Economy, Jobs

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In a bid to survive bankruptcy, Chrsyler is closing nearly 800 dealerships, a full quarter of the company’s dealers. The dealers themselves had no say.

While bankruptcy may be a better long-term solution for Chrysler than continued government bailouts, the short-term will not be pretty. Car dealerships provide a lot of jobs and a lot of tax revenue for communities. They also tend to sponsor charity events and spend a lot on advertising, particularly in local newspapers which, as we all know, aren’t doing so well these days.

The National Automobile Dealers Association (NADA) has already launched a campaign calling on President Obama to act now to stop the Chrysler closings and the ones expected to affect over 1,000 GM dealers in the next few weeks and months. One of NADA’s talking points is that dealers, on average, pump $16.5 million per year into their communities. The lost revenue will be felt deeply in a lot of places.

But just because something is painful doesn’t mean it’s unnecessary. No one wants to see this kind of turmoil in what was once one of America’s proudest companies, but Chrysler simply can’t hope to continue without making cuts. Better to remove a quarter of their dealers now than to have to shutter them all in a year or two. That’s the raw and unfortunate calculus. But I’m sure that’s cold comfort to those who will lose their jobs.


This entry was posted on Friday, May 15th, 2009 and is filed under Business, Cars, Economy, Jobs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

5 Responses to “Chrysler Closing Almost 800 Dealerships”

  1. Shaun Says:

    I feel terrible for these dealers, but they are a big reason that Chrysler has utterly failed as a car company. The dealers took whatever crap that the company sent them with nary a murmur of dissent.

    Maybe — just maybe — things would have turned out differently if the guys in the sharkskin suits and loud ties had pressed Chrysler to diversify its product line, rely less on SUVs, lead the charge on hybrid technology and cut back on the pimpmobile stylings.

  2. Agnostick Says:

    And now, on the heels of this… strong rumors that GM will be making similar cuts… to the tune of 1,100 dealerships… or maybe it’s closer to the 2,600 that CNN is reporting.</a

    Agnostick
    [email protected]

  3. kranky kritter Says:

    In discussions with a friend, we agreed that there was really no viable way to “fix” Chrysler or GM (which is to say transform them into viable sustainable enterprises) without essentially screwing all sorts of other entities that have substantial relationships with the companies under a previous understanding which simply isn’t sustainable. That includes creditors who will get pennies on the dollars, dealers and suppliers who will be left in the lurch, remaining employees with lesser benefits and lower wages, retirees who may get less than they were promised and right on down the line.

    Lots and lots of folks involved in the auto industry have been warned for years that they were whistling through the graveyard in terms of having an unsustainable model, and yet they all continued blithely on. Now the reckoning is here, the vengeful ghosts are rising, and it’s extremely ugly and frightening for everyone involved. I say that with no joy and much sympathy. The system as a whole worked to its own ends, largely beyond the control of individual actors.

    We are looking at serious and unpleasant rippling change, the sort of upheaval that, let’s face it, none us wanted to face. And now we are all stuck facing the results of all the equations we didn’t want to face, preferring to assume that “I’m sure it will all be fine.”

    Today, there is no substitute for looking at your life and doing the math.

    By the way, when it comes to thing like pensions, social security, and medicare, we are ALL whistling through a similar graveyard. Forget there but for the grace of god. That grace in not protecting us as much as we’d all like to think.

    And if you piled up a big stack and think you are all set, think again. This is a democracy populated with lots and lots of folks who have no plan beyond social security and “we’ll get by somehow, we always have.” How long will it take for the getting by somehow crowd to notice the big piles here and there? Not long. Take my word, it’s underway.

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  5. Tully Says:

    Shaun reliably and predictably playing blame-the-victim. The unions had nothing to do with it. Top management at Chrysler did nothing wrong. Chrysler’s (and GMAC’s) owner, the extremely well-connected Cerberus Capital Management, is of course blameless. That major debt load from the 2006-2007 Chrysler/GMAC buyouts had nothing at all to do with the situation. Over-leveraging the companies didn’t leave them at all at risk in a volatile marketplace. No sirree. Not in the least. It was all the fault of those dealerships.

    Damn Chrysler dealerships, selling the vehicles in their captive product line that people would actually buy! Why, they should have been forcing their customers into generic motorized roller skates! Drugged them and coerced them into signing the loan papers for solar-powered Hot Wheels! Marched on Detroit and forced Chrysler to produce MORE solar-powered Hot Wheels!

    Just to state the obvious, dealerships ordered and sold the vehicles in the available product lines that people were buying, having little say in the matter. Those that did not have already gone out of business. Had the demand for motorized roller skates been high enough, they would have leaned on Chrysler to produce more motorized roller skates, and Chrysler would have retooled to make more motorized roller skates. Oh, wait. They did.*

    I wonder how this will play out in state courts, which have their own franchising laws. Some of which may give franchisees some secured rights in bankruptcy.

    (*–Chrysler was the largest US producer of electric vehicles, and had already begun re-gearing to hybrids and electric across the complete product line. Not just for compacts, but for everything from fancy golf carts to full-size pickups.)

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