Chrysler closures hit local dealers
By Bob Williams Staff Writer bwilliams@thealmanac.net
By eliminating nearly 800 dealers nationwide Chrysler and its bankruptcy judge, instead of trying to make the company more profitable, may end up driving long-term customers to other marques, says Bo Corwin, owner of Corwin Chrysler Jeep in Hickory.
"They are taking away our right to make a living," Corwin said. "It's just not right."
Several western Pennsylvania dealers' franchise agreements are targeted by the bankruptcy court--Burgunder in Bridgeville, Century III in West Mifflin, Tomsic in North Strabane and Corwin. Legally, Chrysler is canceling their agreements with these dealerships to sell their products and perform warranty work.
In all, 25 percent of Chrysler dealerships nationwide will be nixed by the courts.
Floodwaters put Greg Burgunder's Dodge dealership in Bridgeville under 4 1/2 feet of water in the aftermath of Hurricane Ivan in September 2004, Burgunder, a third-generation Dodge dealer, rebuilt the business that sits just off Interstate 79.
But after receiving notice from Chrysler Corp. that he would have less than two months to close the dealership, Burgunder said there was little he could do to stage another comeback.
"It's pretty much a done deal," Burgunder said, adding that he felt "disappointed and angry" about a corporate decision that was made in Detroit.
Chrysler, while in the early stages of a merger with Fiat, is the first of the big three to file for bankruptcy. Though General Motors has not filed, it has confirmed that at least 1,100 GM dealerships will be eliminated from its portfolio. Since GM has not filed for bankruptcy, legally they are not required to disclose which dealerships' franchise agreements will be revoked.
Pontiac Motor Division will be eliminated from the GM lineup. Pontiac single point franchises are the first on the chopping block.
Corwin said that his family started the dealership in 1945 and owns both the property and buildings. He said he hopes to remain open as a used car dealership and service facility. He's also open to offers from other manufacturers to market their products, noting that car manufacturers from India are "very close" to having product ready to ship to the United States.
"Does it make any sense to eliminate 25 percent of your revenue and have the government tell you where you can buy a car?" Corwin said. "I have a man here from Midway who has been buying cars from us for more years than I can remember. But now, Chrysler is telling him he has to drive to Avella to get work done on his car? With all the choices out there, does Chrysler expect he is going to remain a customer?"
In this down market, even high-profile manufacturers like Toyota posted losses of $7.3 billion in the first quarter of 2009.
The auto industry is today going through what the steel industry went through in the early 1980s. The Detroit Free Press reports that diminishing sales means the dealerships have less money to spend of advertising, customer service and upkeep of their facilities. Dealers in close proximity end up competing with each other for the remaining sales driving down the price and further hurting profitability.
The logic is that fewer, larger dealerships can invest more in their facilities and generate more sales per square foot of dealer space. But the risk is that the company loses market presence.
"The American public has hundreds of choices, hundreds of different models they can buy," Corwin said. "The American problem is that there is a glut of choices in a down market. Chrysler will combine with Fiat, I have no problem with that. But we wouldn't see Fiat models here for 18 months-two years. China and India are almost ready now, and they could start buying up these open dealerships for their product.
"By Chrysler doing this, they are going to drive more people away from their product," Corwin said.
Corwin said he'll try to remain open as a service facility and used car dealership. But not all of the 800 dealerships can make it. Thousands of jobs will be lost, from salesmen to factory technicians, all looking for precious few openings in a national economy facing over 8 percent unemployment.
Many other contracted services hired by the dealerships will also face income losses as demand for their services drops.
"You are going to see lawsuits out of this," Corwin said. "Too many dealerships have cut, and in my opinion not for good reason. There are petitions circulating now, and it would not surprise me to see a class action lawsuit over this. I want someone to show me where I cost them (the parent corporation) one penny by being here."
According to Chrysler, dealers on the closure list can appeal the decision or close operations by June 9. Since Burgunder doesn't plan to appeal his notice, he said he will liquidate his inventory.
Information in this article was also taken from wire reports.
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