Monday, May 4, 2009
Chrysler dealers down 10 percent since '08
Chrysler LLC has lost more than 10 percent of its dealers since January 2008, the company said Monday.
Chrysler plans to shrink its dealer network even further, but hasn't said how many dealers it plans to eliminate during its stay in bankruptcy court. The company now has fewer than 3,200 dealers.
The Auburn Hills company said in testimony in U.S. Bankruptcy Court in New York that it is losing 30 to 40 dealers a month and has lost 400 since January 2008, said Peter Grady, the director of dealer operations at Chrysler. The company filed for bankruptcy protection Thursday.
Many Chrysler dealers are "on the razor's edge" Grady said, because of the severe cash crunch and difficulty in borrowing funds.
At Chrysler, 50 percent of its dealers account for 90 percent of the company's total sales. Chrysler dealers employ about 140,000 nationwide.
The Rev. Jesse Jackson, in an interview with The Detroit News Monday, said the auto industry has been at the forefront in leading the way for diversity, but in bankruptcy a disproportionate number of minority dealers and suppliers are likely to go out of business, wiping out those gains.
Jackson said Chrysler will take its dealer ranks from 3,200 to 2,000. He said he expects 80 percent of Chrysler's 150 minority dealers will close and 60 percent of General Motors Corp.'s 300 minority dealers will go out of business if GM also files for bankruptcy next month.
Minority dealers often are in parts of the country from which the industry base is shifting, they do not have prime locations within a community and tend to be undercapitalized, all of which make them more vulnerable, Jackson said.
And there is no urgency to bail out these small businesses, including suppliers, the way that large banks are being helped, Jackson said. "We have to make sure dealers can access stimulus money," he said.
"There must be justice in the context of restructuring," Jackson said. "Cutbacks must reflect the communities (automakers) served," he said, adding that minority dealers accounted for about 5 percent of dealers in recent years but that number is "moving towards 1 percent."
The outspoken activist said he wants Congress to have hearings to ensure the companies getting federal loans comply with laws governing equal rights. He also would like to meet the auto task force and he said his team will be organizing rallies across the country, starting in Detroit in the next couple weeks, to educate the public about their stake in preserving minority businesses.
In New York, where bankruptcy proceedings continued, Chrysler has sought permission to cut dealer incentive payments by 25 percent in May and 50 percent in June, as it saves cash during its bankruptcy stay.
Dealers with each of the brands -- Chrysler, Dodge and Jeep -- account for 62 percent of its dealerships.
Chrysler also called Jim Arrigo, co-chairman of the company's National Chrysler Dealers Council, to talk about the impact of a long-term Chrysler bankruptcy on dealers.
"A lot of dealers are just trying to survive," he said. "There's tremendous concern about customers that have walked away from Chrysler" because of concern about the company's financial health.
Arrigo, who owns Arrigo Dodge Chrysler Jeep in West Palm Beach, Fla., said sales are off 65 percent since 2006. In April, he sold just 130 new cars, down from 450 a month in 2006.
"We're still kind of in limbo on where we are going," Arrigo said.
Jackson said he talked to dealers who said they lost customers Thursday due to the announcement that GMAC was taking over the financial arm from Chrysler Financial. There were customers seeking the Chrysler Financial offer of zero-percent financing who were upset that it was abruptly cancelled.
Chrysler could announce new incentives Tuesday after briefing dealers in the morning.
A new marketing campaign also will be rolled out, complete with television ads, but the specifics are still being worked out, and the bankruptcy court must approve funding. Spokeswoman Carrie McElwee said the TV spots will not begin until next week.
Article Link:
Chrysler dealers down 10 percent since '08 | detnews.com | The Detroit News
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