Many communities have felt the sting of closing dealerships, but it appears for some that capitalism Mahindra is coming to the rescue. The Indian truck manufacturer is sweeping in to sign up recently booted Chrysler dealers to sell their fuel efficient diesel pickups. Mahindra is hoping to soon have 300 dealers online and ready to sell the inexpensive trucks. Mahindra had earlier announced that it had over 300 dealers signed up to sell the truck, but the difficult economy and a lack of available credit likely prevented many from having a dealership online in time for the truck's fall introduction. The experienced, ready-for-business Chrysler dealerships are like a gift placed in the lap of the Indian truck maker.

In the Detroit area, the Detroit Free Press is reporting that two former Chrysler dealers will begin selling the truck this fall. The Mahindra truck will exclusively contain 2.2-liter diesel powertrains mated to six speed transmissions. The trucks should easily be able to hit 30 mpg on the highway, while also giving owners the ability to carry a 1.3-ton payload. The Mahindra truck will also cost 10-15% less than comparable Japanese offerings.

The Free Press also reported that Mahindra is planning a diesel-powered SUV for mid-2010. The SUV will reportedly have a price tag in the $13-15k range.

[Source: Free Press]

General Motors wants to shrink its dealer network by around 2,500 outlets and has sent closure notices to more than a thousand already. Still, the General has left a door open that allows affected dealers to appeal the decision and show proof of why they should not be cut from the herd.

According to reports, almost the entire affected body of dealers appealed, and 500 of those appeals are still pending. Thirty dealers have had their sentences overturned and will be allowed to stay open. It is good news for the dealers... and yet the math remains the math: strorefronts have got to go.

[Source: Automotive News, sub. req'd | Photo by MARK RALSTON/AFP/Getty]

Cadillac is one of the core brands that will form the new General Motors, but the dealership network can't continue in its current guise, according to GM sales head Mark LaNeve. There are 1,422 Cadillac dealers nationwide, more than four times the number of Mercedes-Benz dealers and more than six times the number of Lexus dealers. That kind of saturation meant that in 2008, the average Cadillac dealership did one-sixth the business of a Mercedes dealer and one-tenth the business of a Lexus dealer.

To be fair, Cadillac has fewer cars on offer than Mercedes, BMW, or Lexus. Still, GM wants to gets its dealer volume numbers closer that of the competition – proportionally speaking – and that means more dealer closings. GM hasn't said how many, but to even get close to retail parity they'd be looking at many hundreds of closures, with many of them likely to be in metropolitan areas. Whenever those dealers are chosen, as with the others, they will be allowed to remain open until their franchise agreements on October 31, 2010.

[Source: Automotive News - Sub. Req.]

After the suggestion of Congressional hearings on the matter, Chrysler's Jim Press assured Senator Kay Bailey Hutchison (R-TX) that Chrysler dealers with leftover inventory after June 9 would "receive a fair and equitable value." It appears that Chrysler is making good on that promise.

The company's head of sales, Steven Landry, outlined the measures being taken to relieve shuttered dealers of their wares and remunerate them for it. Of the 42,000 cars held by the 780 dealers whose franchises were nixed, 26,000 of them have been sold. The rest, save for 220 cars, have been assigned to be moved to dealers that are still in business. Those last 220 cars are in the possession of dealers who haven't yet agreed to Chrysler's plan, but the cars already have new dealer homes waiting if and when things are agreed.

As for payment, after the cars arrive at their redistribution point, the new dealer's finance company will pay off the old dealer's finance company for an inventory acquired, save for $350 in destination fees. All else, according to Landry, including holdback and advertising funds, will be repaid. There is at least a little good news to start the week...

[Source: Automotive News, sub. req'd | Photo by Scott Olson/Getty]

On April 8, 50-year-old Charles P. Dimmick died doing what he loved to do: watching his favorite driver, Jeff Gordon, run in the Phoenix round of NASCAR. Dimmick was also the marketing manager at Lund Cadillac Hummer Saab in Phoenix, and if you believe the person who wrote his obituary, he also loved to sell cars.

In the notice itself (after the details of his death and before the details of the wake), was this line: "We are sure he would still want all to know that 0.9% financing is still available on all New 2008 Hummer H2's." It isn't clear who wrote the obituary, but tasking someone with selling H2 inventory even after they die sounds a bit like something Dante might be involved in.

[Source: Yahoo!]

General Motors is going to right-size its dealer body as part of its bankruptcy, and the Detroit automaker is going to ask plenty of dealers that make the cut to remain with the "new" GM. The General has already announced that 1,124 dealerships wouldn't be renewed in October 2010, and another 200 franchises will receive similar notices this week.

GM VP Mark LaNeve told Automotive News that the remaining GM retail outlets would need to sign a participation agreement to stay off the endangered species list. The agreement will guarantee that the dealers will make required facility upgrades and reach customer satisfaction objectives. Surviving dealers will also need to remove all non-GM vehicles from the showroom. If the dealers refuse to sign the participation agreement by a mid-June deadline, they will be cast into the "old GM" bin, and the dealerships will be terminated in a manner similar to the 789 Chrysler dealers that will cease to exist on June 9.

The 1,324 dealers that are scheduled to go away in 17 months will also need to sign an agreement to avert an early closure. The "wind down" agreement will enable the dealerships to receive money from GM for inventory for unused inventory and leftover parts and signage. In return, the dealers will not be able to sue the General. Some dealers will even be paid up front for their loss, while others will receive money closer to October 2010. Dealers that refuse to sign the wind down agreement will lose their franchise soon after the mid-June deadline.

[Source: Automotive News - Sub. Req. | Image Source: Mark Ralston/Getty]

On top of the 1,124 General Motors dealers that will be closed next year, the ailing automaker is reportedly going to announce another round of dealer closings on Monday when its bankruptcy declaration is expected. According to two Automotive News sources, 450 dealers will not see their dealer franchises renewed. For his part, Mark LaNeve, GM's VP of North American sales, said the number would be "less than half that."

No matter the number, it's more of the same bad-yet-necessary news being spread around. LaNeve notes that the dealers who won't be renewed "have very specific issues" including "specific performance issues." Among them are supposed to be some stores that are skewed exclusively or heavily Pontiac. These dealers will be shutting up shop when their franchise agreements expire in October 2010.

[Source: Automotive News -sub req'd | Image: Mark Ralston/Getty]

The situations with GM and Chrysler are beginning to look like what happens after a fumble in an NFL game: a dozen men pile on top of each other all trying to get the ball. The difference in the case of GM and Chrysler is there are far more than two teams struggling for the prize. The latest to hop on and shove a hand in is the Senate Commerce Committee, which wants the CEOs to testify "early next month" regarding the planned dealership closings.

Chrysler's sent 789 dealers eviction notices, GM is out to dispatch 1,124 dealers in the US and about 245 in Canada. The GM dealers won't have their franchises renewed as of October 2010, and are said to be staying in operation until they sell the last of their inventory. Chrysler dealers are expected to board up the windows by June 9, although Jim Press recently gave assurances that there will still be help given to those dealers after that date. The Commerce Committee isn't moved by either proposal, citing what it calls "the short and insufficient transition period given to dealerships for franchise terminations."

The hearings would be chaired by Senators John Rockefeller and Kay Bailey Hutchison, and will address what happens to dealer inventory and jobs and consumer needs like warranties and servicing. Hutchison was working on legislation to force automakers to give dealers 60 days notice before closing their franchises (which GM has done) or else go without government help. That legislation was put on hold after Press' letter, but now Nardelli and Henderson will need to go explain things to the principal in person.

For GM it's just one more thing to lump into the impending bankruptcy in-box. For Chrysler, every additional delay in sorting out its business situation only gives Fiat more of those pre-wedding jitters.

[Source: Automotive News - Sub. Req.]

A story in the New York Times shines a light on some reasons for the Committee of Chrysler Affected Dealers to challenge the car company's bankruptcy efforts. The element common to all of the dealers profiled is that they did extraordinary things Chrysler asked them to do, such as buy too many cars and combine franchises at their own expense, only to find out they had been chosen for termination after bankruptcy.

Chrysler isn't buying back the inventory that sits on dealer lots -- inventory that, in some cases, Chrysler specifically asked dealers to take too much of in order to help make the company look better for sale. Banks have also dropped many dealers because they no longer have new-car franchises, making it even harder to sell the cars they have.

Until a few days ago, the dealers were told they had only until June 9 to liquidate everything. However, an exchange between Senator Kay Bailey Hutchison (R-TX) and Chrysler President Jim Press has lead to an assurance from Press that dealers will "receive a fair and equitable value for virtually all of their outstanding vehicle and parts inventory," and that former franchisees would "receive a daily report which specifically outlines each unit of inventory and its place in the transition process." The suggestion was also that this would be the case after June 9.

Meanwhile, dealers who spent millions of dollars to show their commitment to Chrysler, only to be unceremoniously cut, will continue to fight their cases in court and on the showroom floor.

[Source: NY Times]

History could eventually reveal that Chrysler declaring bankruptcy may have just been the easy part. According to CNN, affidavits taken from Chrysler engineers and executives do a pretty good job of showing that things will get really tough when it's time for the automaker to start making cars again, the theme being that downtime will prove even more costly than running time.

When Chrysler is ready to make new vehicles again, Auburn Hills and its suppliers will face numerous issues: no new models are being worked on in bankruptcy, and when development begins again, it will reportedly take 50% longer to get those cars developed. Of more immediate concern is that while production plants are idled and nothing is being made, factories still need to be cared for and equipment must be stored – documents suggest that the bill for storing paint alone is $2 million, and it's $15 million to replace the paint. Finally, suppliers will be asked to begin producing parts after a lengthy interruption in revenue and with no money up front; and none of the new models can be built until the current models sitting on assembly lines are finished.

All of this is before you get into issues like the 300,000+ 2008 and 2009 model year cars sitting on dealer lots – not to mention the millions owed to dealers for incentives, warranty costs and receivables. And while it also explains why Chrysler has had such a hard time finding a tie-up, news like this makes one wonder about what's really worth saving in the maelstrom and what kind of "Chrysler" we will see emerge from it.

[Source: CNN]