Speculation: Chrysler to cut loose 800 dealers on Thursday
Chrysler has a lot of work to do in bankruptcy court to be eligible to receive another $6 billion in loans from the U.S. government. Among the many tasks requiring completion is the reduction of its dealer body. Chrysler hasn't set a timetable or announced how many dealers will be cut, but one lawyer claims to know the number and the date. Stephen Lerner from the law firm Squire Sanders reportedly said in a conference call that Chrysler is planning to cut 800 of its 3,200 dealers by Thursday of this week.
Chrysler calls the figure pure speculation, with spokeswoman Kathy Graham telling the Associated Press, "We do not have any finalized list as of this point in time." Few doubt that retail stores will be cut, though. The expected criteria for escaping the chopping block includes sales volume, profitability, available capital, strength of facilities and having all three Chrysler family brands. What hasn't been answered is whether dealers will be compensated for more than just existing inventory if the bankruptcy court agrees to tear up their franchise agreements.
We also don't know whether Stephen Lerner actually has any inside information regarding dealership closings. Squire Sanders is reportedly offering to represent any dealer that feels it could be on the closing list for $4,000. While that sounds like small change, the law firm could make millions if a large number of dealers participate in the suit. We'll find out tomorrow if Lerner is right.
[Source: MLive, Photo by Justin Sullivan/Getty]
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Reader Comments (Page 1 of 2)
chop 7:17PM (5/13/2009)
that dude with the shades is so cool. ha
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inteller 8:31AM (5/14/2009)
can't tell if that is a typical dodge customer or salesman....they both look the same.
"yeah, I'm gonna go get me a HEMI Charger"
Sea Urchin 7:27PM (5/13/2009)
The KEY for Chrysler is to do this smartly, i hope that they have a detailed plan, because they may end up cutting some real good dealers in good areas and leaving some bad ones. They need to do this slowly and accurately so they do not end up in disadvantaged situation later on.
Yes it's painful. No one wants to see people lose jobs and their investments. However the reality is that the car market has shrunk, and there's simply no need for so many dealers.
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inteller 8:28AM (5/14/2009)
Here is hoping "Yvonne Hubbel's East Tulsa Dodge" bites the big one today!
skydiveguy77 9:28AM (5/14/2009)
???"Yvonne Hubbel's East Tulsa Dodge"???
Dude... what are you talking about???
Can't all of East Tulsa just go away too?
Tom Miller 12:29PM (5/14/2009)
So why not let the market decide which dealers die? Survival of the Fittest. Really difficult to see how fewer dealers will help Chrysler.
ryan 7:29PM (5/13/2009)
awesome.
so, because tomorrow is my day off, should i wait for a phone call or should i just come in to work on friday and be all like, "so, do i have a job still?"
guess statistically my odds are about 3 in 4 that i WOULD have a job still, but jeez....
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zamafir 8:47PM (5/13/2009)
could be worse, it could be 200 more like GM on friday.
kal326 11:29AM (5/14/2009)
Looks like slightly better than a 3 in 4 shot as it looks like they are only closing 789 out of the 3181 or 24.8%.
http://money.cnn.com/2009/05/14/autos/chrysler_dealer_closings/index.htm?postversion=2009051410
Sea Urchin 7:37PM (5/13/2009)
The numbers may seem large, but i read somewhere that average dealership employees a total of about 50 people.
Just for the arguments sake let's say each dealership employs 70 people,
70*800=56,000 plus now that some dealers will close others will see their business go up, so they will hire more people.
This is just as everyone who is not a fanboy predicted, the reconstruction of auto industry will NOT have a huge effect on the economy.
56,000 is a lot of people, but on national level it really isn't much. Plus you have to consider that some of the mechanics can probably find jobs at independent shops.
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Aloysius Vampa 7:42PM (5/13/2009)
But... the news said! THEY SAID!
ItsaJeepThingItsAlwaysBroken 2:07AM (5/14/2009)
Ohhh look a classy salesman is walking towards us
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ryan 7:42PM (5/13/2009)
not so much that, sea urchin, it's more like i'd have to go and find EVERY customer that i've sold, tell them where i'm going, and HOPE they will follow.
i know i can find a job someplace else. it's just the uncertainty that's somewhat bothersome.
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Ray 9:28PM (5/13/2009)
I hate to see someone lose their job, but like Sea Urchin said they need to study which are good dealerships and which are not and cut the appropriate ones. But big bad government probably won't let that happen. They'll make the decisions and really screw everything up.
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Jared 9:32PM (5/13/2009)
So, how long to the remaining Chrysler dealers have? Six more weeks before Chapter 7?
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Sniffadog 10:55PM (5/13/2009)
bah! lose not loose
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Sniffadog 10:58PM (5/13/2009)
im just haing oen of those days ... disregard my ramblings :|
iijohn88ii 10:56PM (5/13/2009)
Maybe now is a good time for me to buy a Dodge Ram...
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Venom 12:37AM (5/14/2009)
Even though Chrysler is a garbage company, well the guys running it anyway, this is so sad to see.
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BoxerFanatic 12:45AM (5/14/2009)
Wow, how the over-all sentiment shifts...
With dealers, all of the sudden market forces are at work... too much supply, not enough demand, and all that...
So let the dealers, who may or may not have been run independently well, let them sink when chrysler cuts them off.
But Chrysler itself... let's leverage future taxes and huge deficits and federal involvement, because they are too big to fail, until the government can make hay with their failure.
Funny how the over-all sentiment shifts when you are "too big to fail", and "powered by UAW."
I'm just sayin'...
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