Chrysler Dealers Lose Franchise Agreements

Chryslerdealership Is today judgment day for Chrysler? While Chrysler and Fiat officials wait to see what, if anything, the Supreme Court will do to their proposed deal, Fiat said that its plan to buy Chrysler is still on even though it can walk away from the deal if it isn’t completed by mid-June.

"Fiat will not walk away from the deal if it isn't completed by the June 15 deadline," a spokesman for the Italian automaker said.

No matter what happens, though, judgment day has arrived for 789 Chrysler, Jeep and Dodge dealerships across the country.

That number represents 25% of the 3,189 Chrysler dealerships in the U.S. Those 789 will lose their franchise agreements today and therefore cannot offer Chrysler’s national sales incentives. This makes it fairly difficult to sell cars in an already depressed market. Dealerships were targeted based on poor sales performance, close proximity to other Chrysler dealerships and not selling all three Chrysler brands.

Dealers — many of which are family-owned operations and some of which have been around for 20, 30, 40 years — pointed out in court that cutting dealerships will not save Chrysler. Dealerships cover most of their own costs, including salaries and advertising. Chrysler obviously begs to differ.

Still, how much blame does Chrysler deserve for the poor sales performance of its dealers? Peter J. Walsh, owner of Walsh Dodge in Jersey City, N.J., told the Associated Press that Chrysler pressured him to sell more pickup trucks — a poor choice of vehicle to hock in the stop-and-go sprawl of New Jersey.

“How many Dodge pickups can I sell in Jersey City?” Walsh said. “It’s not Waco, Texas.”

Many of the cut dealerships will carry on as used-car lots and service centers, but selling off the last of their inventory has been a painful experience.

“In essence, I paid people to take some of my cars,” said Dale Horn, owner of a Chrysler dealership in Malvern, Ark. “It’s just not a pleasant deal.”

Chrysler Dealers Scramble to Unload Vehicles (Associated Press)

By Stephen Markley | June 9, 2009 | Comments (5)
Tags: Chrysler, Dodge, Jeep

Comments 

Stellar

“In essence, I paid people to take some of my cars,” said Dale Horn, owner of a Chrysler dealership in Malvern, Ark. “It’s just not a pleasant deal.”

Does that mean he actually had to pay people to buy some cars, or did he have to discount them so much he lost money on them?

I wonder if Chrysler manages to hang on until the economy gets better, will their sales get better and their quality get better, or if it'll just keep going downhill for them?

Stellar,

I think he meant the latter.

Not here

My local closing dealer was only willing to go Invoice and "Loyalty cash". He still has all of his cars and a bunch of repos. I wonder where all his cars are going?

Ernie Mancuso

GM AND CHRYSLER DIDN'T CARE ABOUT QUALITY 20 YEARS AGO SO WHY SHOULD WE CARE NOW? LET THE WORKERS GO WORK FOR HONDA TOYOTA NISSAN INSTEAD. THEY ARE MADE HERE ANYWAY

Troy S.

Do you honestly think Chrysler dealers didn't see this coming? Afterall, the past couple of YEARS have indicated this very scenario. Did they not? I'm an average consumer and I could see the writing on the wall clear as day.

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