Chrysler dealers question franchise terminations

NEW YORK -- A parade of Chrysler dealers slated to lose their franchises took the stand Thursday in the automaker's bankruptcy protection case, many of them touting their sales and service records over the years and questioning how they were chosen for termination.

Just under 20 dealers were sworn in at the beginning of what was expected to be a lengthy day of testimony from both dealers and Chrysler LLC executives.

It's not clear when Judge Arthur Gonzalez will rule on Chrysler's motion, or how this will effect Chrysler's plans to terminate the dealer franchises effective Tuesday.

James Tarbox broke down while testifying about learning that the franchises for his pair of dealerships in Rhode Island and Massachusetts were included on Chrysler's list of the 789 it plans to terminate.

"I was flabbergasted, to say the least," said a flushed Tarbox. After a long silence, the judge suggested a drink of water to help Tarbox regain his composure.

Tarbox suggested the company's decision to close his business was payback for his protest to state authorities over Chrysler plans to grant a franchise near his. Tarbox said his dealership would have turned a profit in 2008, but for the $70,000 he spent on the legal protest.

A dealer from Arkansas suggested his similar complaint led to the termination of his business, which he described as "more profitable than both Chrysler and GM combined."

On cross-examination, many of the dealers said they were located near competing Chrysler dealers offering all three Chrysler brands or admitted a sharp drop-off in performance in recent years.

Auburn Hills, Mich.-based Chrysler claims that it needs to reduce its dealer base by about 25% to a leaner network of about 2,400 dealers in order to emerge from bankruptcy protection as a stronger company.

But the dealers argue that they don't cost the automaker anything. They say that if Gonzalez approves Chrysler's motion it will result in the shut down of hundreds of dealerships and thousands of workers will lose their jobs.