Chrysler dealerships worry about what's next

ByABC News
May 11, 2009, 11:21 PM

— -- In the days after Chrysler's Chapter 11 filing, people are watching closely to see if consumers are still willing to buy cars from an automaker that's in bankruptcy court.

The industry has warned that carmakers can't go into Chapter 11 like other companies, because people won't buy a car from a bankrupt automaker.

But there's evidence at dealerships around the country that people are still willing to shop for Chrysler vehicles. Some are bargain hunters. Some are there out of a sense of duty, trying to do something good for their country. And others may just want a Chrysler, Dodge or Jeep and are ready to buy.

Still, dealers are nervous. They worry whether they'll be around in a few months, once Chrysler gets around to closing some portion of its 3,200 dealers, a number it says it wants to trim. They worry that production shutdowns Chrysler has closed its plants for at least a month will leave them without anything to sell in a couple of months. And they worry, mostly, about the uncertainty of what's to come.

Like any good salesman, though, dealers are trying to put an optimistic spin on the situation. "America loves an underdog," says Alan Wilson, president of Howard Wilson Chrysler-Jeep-Suzuki in the Jackson, Miss., metro area. "America has always rallied to people when they are down on their luck."

Consumer website Edmunds.com says Chrysler dealers got an initial bump in interest after its bankruptcy filing. Web searches for Chrysler products jumped 15%, Edmunds says.

"Maybe the Chrysler bankruptcy announcement attracted the bargain shoppers, who may think a bankruptcy is the same as liquidation with price-busting clearance sales," says Michelle Krebs, editor of Edmunds.com's AutoObserver.

Dealers back that up. They say customers are coming into the showroom and making outrageously low offers, expecting dealers to take any price just to sell a car. Edmunds.com's most recent data indicate that Chryslers already were selling for an average of 18.1% below sticker price before the bankruptcy filing. The industry average discount is 15.6%.