Chrysler to drop four area dealerships, 789 overall

Posted May 14, 2009

— 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.

Southern States Dodge in Raleigh, Johnson Chrysler-Dodge-Jeep in Durham, Goldsboro Chrysler-Dodge-Jeep and Williamson Motors in Clinton are among the 789 dealerships the company wants to drop by June 9, according to a motion filed with the U.S. Bankruptcy Court in New York. A total of 14 dealerships are expected to close in the state.

In a press release, Southern States officials in Raleigh said their Dodge dealership is no longer a profitable venture anyway. Officials said no layoffs are planned. Employees will be absorbed into other Southern States locations that sell makes like Mazda, Volkswagen and Nissan. The Nissan dealer will move into the current Dodge showroom.

Dodge Chrysler drops four local dealerships

“It has been something we figured was probably coming down the pike,” said Brian McInerney of Southern States.

McInerney says Dodge sales have been down 50percent in the last year. “Chrysler sales have been slowing down because of everything going on,” he said.

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 via United Parcel Service letter if they would remain or be eliminated. The move, which the dealers can appeal, is likely to cause devastating affects in cities and towns across the country as thousands of jobs are lost and taxes are not paid.

“It has been difficult for a lot of dealers to survive,” said Steve Morgan, of Westgate Chrysler-Jeep-Dodge in Raleigh.

Morgan, whose dealership was not listed among the closures, said he plans to stick with the car maker.

“Sometimes change is good,” Morgan said. He believes it will allow the company to reorganize and become stronger.

Cutting stores may be good for business, he said.

“Fewer dealers will make the dealers remaining more healthy – increase their sales,” Morgan said.

Morgan said he will continue to honor all Chrysler warranties.

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.

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.


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  • whatistheworldcomingto May 14, 2009

    One more thing, NCcarguy: I think your points would get across much better if you'd use just one more exclamation point.

  • whatistheworldcomingto May 14, 2009

    Interesting, NCcarguy. You know what you're talking about, eh? I AM a state employee & so is my HUSBAND. You lose from 1 paycheck? We lose from 2.

    MY annointed one? What makes you think that I voted for Obama? Just because he's in office doesn't mean that EVERYONE voted for him.

    I agree that positions in state gov't need to be cut. I see all too often people who do next to nothing, yet make close to 6 figures a year. (Neither my husband or myself are even close to that figure.)

    Btw, you misunderstood my phrase "let it go". If you'd like to continue spouting off about the furlough, I suggest you do it on an article related to the furlough. This article is about Chrysler, not state gov't.

    The furlough is going to take place no matter what. We all have to deal with that. No sense complaining about it. I find it ironic, too, that you talk about the state employees complaining, yet YOU were the one to bring up the issue in this article...

    Have a nice day!

  • ObamaMustGo aka NCcarguy May 14, 2009

    and wife is a state employee....I KNOW what I'm talking about here!

  • ObamaMustGo aka NCcarguy May 14, 2009

    whatistheworldcomingto......let it go??? are you KIDDING ME!!!? I'm not letting it go! YOUR annointed one obama is expanding GOVERNMENT at a record pace, and private companies are dying out! LET IT GO!? the government needs to be CUTTING STAFF AT THE SAME PACE that the economy is contracting! period. 10% staff reduction today! anything less is a joke!

  • whatistheworldcomingto May 14, 2009

    NCcarguy, let it go! No one wants a pay cut... period. No one wants to lose their job, either. For you to keep implying that state/gov't employees should just roll over and take it, that's your opinion which you've every right to have. Just remember, state/gov't employees have the right to have an opposing opinion. FOR THE FINAL TIME, it's NOT the pay cut. It's losing part of an annual salary in two short months, and to be told about by the media, not by the state government. "Giving" 10 hours of comp time that will probably never be used (because the work will still be waiting to get done) is laughable.

    Please deal with the issue at hand: Companies closing = more people out of work and more competition for jobs that are available. I am praying for families that will suffer because of this.

  • ObamaMustGo aka NCcarguy May 14, 2009

    that's a LOT MORE private industry people out of work in our area, and yet the GOVERNMENT employees are complaining about a 0.5% pay cut! anyone else see any problems here?

  • ncsudan May 14, 2009

    Worland, The Adminstration, in conjuction with Chrysler tried to avoid this step by working with the creditors to 'forgive' parts of the money owed, so the company could re-structure and pay back some money. The creditors said, NO WAY, we want our money. So they said fine, filed for backrupcy protection from their creditors, and now a judge can award them NOTHING if so choosen. They missed their chance to get some money back. They also could have not loaned them the money in the first place.

  • krisandbruiser May 14, 2009

    How can you close a dealership that is already out of business??? Goldsboro Chrysler Dodge Jeep closed unexpectedly several months ago. There's nothing there but an empty building. The Honda dealership went at the same time.

  • grimreaper May 14, 2009

    I don't know...all this talk about Fiat this and Fiat that...Fiat is simply trying to become the world's biggest automaker at a cheap cost...but they really only want the overseas aspects of the business from GM etc.

    So why are the likes of GM, Chrysler, and Ford not simply merging as one big powerful American global company and then heavily leveraging the benefits of economy of scale?

  • poorman May 14, 2009

    Instead of closing dealerships, they should get rid of all those high paid idiots that got them in this shape. All this will do is give the consumer less leverage in the market.