GM Joins Chrysler in Dealership Cuts

May 15, 2009 12:00:00 AM PDT
Chrysler is cutting ties with hundreds of dealerships, including some here in the Valley.Liberty Chrysler in Hanford and Ron Smith Jeep in Merced may be forced to cut ties with the automaker next month if the plan is approved by a bankruptcy judge.

Chrysler told a bankruptcy court it wants to eliminate a quarter of its 3,200 dealerships by June 9th.

And Friday morning General Motors plans to notify some of its franchises, that's this is the end of the line.

It came in the form of a letter from corporate: the news so many Chrysler dealerships had dreaded. "Your agreement will be rejected on or about June 9."

Thursday, Chrysler announced it will eliminate 789 dealerships next month, cutting some 40,000 jobs in the process. Over a hundred of those jobs are at integrity Chrysler Jeep Dodge in Las Vegas where many employees have already left.

"What we're trying to do now is an orderly wind-down. We quit selling cars on Saturday, and right now we're just wrapping up any details of transactions in process," said Dave Wick with Integrity Chrysler.

Chrysler wants to cut overhead by trimming its vast dealer network. The winners? Big chains like Autonation. "The business model of the future in retail is fewer stores with high throughput. That's a win for the consumer you can actually lower your prices because you're fixed cost is so much less per vehicle," said Mike Jackson with Autonation.

Still, angry dealers took out ads claiming the closings will cost 150,000 "main street" jobs and millions in sales tax revenue. "There's many, many people that will feel the ripple effect of any dealership going out of business," said John Phelan with the Chicago Automobile Trade Association.

And Chrysler isn't alone. Friday General Motors will notify nearly 1,100 dealers that their contracts will not be renewed.

Soon, they will feel the pain now felt by families who have sold Chrysler for generations.

Technically, bankruptcy court still needs to approve Chrysler's plan. If it does, June 9th will the last day of business for those dealerships.

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