Closing day comes, and Chrysler dealers aren't happy
— -- Colleen McDonald calls Chrysler "the devil" as she laments losing two Chrysler auto dealership franchises in suburban Detroit , two weeks after being notified by General Motors that her Chevrolet store is being terminated.
Livonia Chrysler Jeep and Century Dodge in Taylor are closing Tuesday, victims of Chrysler's Chapter 11 bankruptcy reorganization that allowed the automaker to get rid of 789 dealership contracts in one fell swoop, cutting its network to 2,400.
Some closed already. Another 300 or so are waiting, with little hope, for the results of a bankruptcy court hearing Tuesday on their petitions for relief. But practically speaking, all are out of business today. They'll get no more sales incentive or warranty help from the automaker, no factory financing and no more cars and trucks.
"I have a Chrysler-Dodge-Jeep dealership with no cars. I can't go forward with this business plan," says Howard Sellz, who has been in the car business 44 years and runs Big Valley Dodge — now just three acres of empty lots in the Los Angeles suburb of Van Nuys. His office is filled with decades of photos showing him with famous customers and friends such as Jay Leno , Chuck Connors, Sandy Koufax and Frank Sinatra.
He started liquidating March 4, got a series of franchise extensions, but that halted when Chrysler filed for Chapter 11 protection April 30.
Car buyers who've come out on the wrong end of a negotiation with a dealer might be quietly saying that some had it coming. But the impact goes well beyond the person who holds the franchise agreement with the automaker.
An auto dealership averages 50 direct employees, according to the National Automobile Dealers Association (NADA) trade group. That's about 40,000 jobs at the 789 Chrysler dealerships closing, though some find jobs at their other dealerships or with the used car operations that some exiting Chrysler dealers plan to start.
An average auto dealership pays $2.5 million in annual salaries, NADA says, plus millions more for services, such as companies that supply and clean mechanics' uniforms, and taxes and fees.
"State and local governments will lose millions of dollars in auto sales tax revenue that is essential for economic recovery," says NADA Chairman John McEleney, arguing dealer cuts are too fast.
To ease the way out, Chrysler says it will redistribute inventories from dealers closing Tuesday to surviving dealers. Payments from the new seller and Chrysler will cover the vehicle, it says, though Chrysler will charge the old dealer $350 per vehicle to ship them. "They'll be made whole, other than the $350," Steven Landry, Chrysler executive vice president of North American sales and service told trade publication Automotive News.
