I heard that all the new cars that the closed Chrysler dealers have in their inventory are being sent to auctions. So for other dealers, it's time to get a brand new Mopar product for DIRT CHEAP!
It really hit home when I saw that a dealer in a small town in Minnesota (BOE Chrysler in West Concord MN with a Population of 763) that I cold-called on for work on Tuesday is being closed by Chrysler.
Here's the article from the Minneapolis paper:
18 Chrysler dealers to close here
DEE DePASS, Star Tribune
The gas runs out next month for 18 Minnesota Chrysler dealerships, most in outstate Minnesota, that are among 789 dealerships nationwide that the automaker says it must close to survive.
Chrysler submitted a 40-page list of pending closures to a bankruptcy court judge Thursday in response to government demands it dramatically shrink. Chrysler officials said many dealers on the list had either the wrong location, too few sales or competed so fiercely against each other that they dragged down prices.
The closures, scheduled to occur by June 9, represent 25 percent of Chrysler's roughly 3,200 dealers nationwide. Economists estimate 42,000 dealership jobs could be lost in the closings, not counting thousands of related jobs at suppliers and ancillary businesses that depend on spending by dealership employees.
The closings in Minnesota could eliminate about 1,000 dealership jobs.
Scott Lambert, spokesman for the Minnesota Auto Dealers Association, said his members are dumbfounded that their independent dealerships are being targeted in cost-cutting efforts.
"We are not the problem," Lambert said. "Our dealers own their own property, buy their own cars, and they pay for their own signs. So we are a cost-free distribution system," he said. "This is being driven by a bunch of Wall Street bankers."
Dealers can appeal Chrysler's decision. The targeted businesses could still try to stay open selling used vehicles or those made by other manufacturers.
Most of the Minnesota dealers Chrysler targeted are small operations in rural areas, or they are among those that don't sell the company's three brands -- Chrysler, Dodge and Jeep -- under one roof. Those listed in or near the Twin Cities include Stillwater Motor Co. and Fury Dodge Chrysler in Lake Elmo.
Fury Dodge General Manager Jim Leonard said he was meeting with employees Thursday and planned to "see what will happen" now that Chrysler has made its decision public. Fury Motors, one of the largest Chrysler dealers in the state, also operates a large store in South St. Paul, which won't be affected.
Others identified for closure include: BOE Chrysler Center in West Concord, Factor Motors in Le Center, Mason Motors in Excelsior, Nereson Automotive Jeep in Detroit Lakes, Marchant Motors in Spring Valley, North Star Garage in Milaca, Pen Motors Inc./Miller Hill Chrysler Jeep in Duluth and Paul Busch Auto in Wabasha.
Two stores owned by Brad Skytta are on the list: Sonju Two Harbors and Iron Trail Chrysler in Virginia. Also listed are Salem Motors in Crookston, Salmon Motors in Tracy, Scott-Preusse Inc. in Redwood Falls, Scholtes Auto World in Worthington and Wally's Auto Service in Orr.
Chrysler also listed the already-closed Denny Hecker Chrysler Dodge Jeep operation in Pine City.
Although Chrysler included Walser Bloomington Motors in Hopkins on the list, owner Paul Walser said it will remain open and "it will be business as usual." Walser said his store made the list only because Chrysler assigned it two dealership codes after he bought the Hopkins operation from David Luther awhile back. Chrysler is merely dropping one of the codes.
Seventeen Wisconsin dealerships made the list, including Chilson Inc. in Eau Claire, Darrow Automotive in Menomonee Falls and Johnson Motors in St. Croix Falls.
According to Chrysler's bankruptcy filing Thursday, about 2,392 Chrysler, Jeep or Dodge dealers are expected to stay on with Chrysler once it merges with Fiat to form a new company in a plan that is subject to court approval.
Walser, who is one of Minnesota's largest auto dealers, said he sympathizes with dealers that must close. But he added that Chrysler's list is "not as deep as feared. So there is less damage here than a lot of people expected."
Chrysler dealers aren't the only ones facing uncertainty.
General Motors is expected to announce, possibly as soon as today, that 2,600 of its 6,200 dealerships will be targeted for closure. GM's list may not be made public, however, as it's not in bankruptcy court, and publicly releasing the list outside a court proceeding could hurt dealers' chances of winding down in an orderly manner.
Hundreds of dealers and their related professional organizations showed up in Washington, D.C., this week to protest the pending closures.
"A rapid cut of dealers is a bad idea," said John McEleney, chairman of the National Automobile Dealers Association. "This would have adverse effects on the auto industry and hurt an already struggling U.S. economy," McEleney said. Taken together, the pending dealership closures by GM and Chrysler could result in as many as 200,000 Americans losing their jobs, he said.
Some dealerships, such as those owned by the Dondelinger family, anticipated that they might be targeted for closure. The Dondelingers announced last month that they would voluntarily shut their General Motors franchise operations in Little Falls, Pine River and Wadena.
But many other Minnesota auto dealers cling to hope that they will be spared.
"It will be devastating," for those targeted, said Paul Rubin, who owns GM franchises in Belle Plaine and White Bear Lake. "We buy our own real estate. But if overnight they say you have no car dealership ... then you have no cars to sell and you will default on your property because you can't pay your $80,000 monthly payment," Rubin said. "It's a scary proposition."
Rubin said he expects GM first to "select the low-hanging fruit," closing those 500 dealers who sell only one to five new cars a month. Then it will probably lose another 500 when it shuts or sells its Saab, Hummer and Saturn brands. Another 500 owners will probably quit their franchises, he said.
"They will want to knock out another 1,000 sometime in the next year and a half," Rubin added. "I don't really think they will send a letter out and cancel them immediately. But they may send a letter that says that when the contract is up in 2010, we don't intend to offer you another contract."
GM says the government, which fronted the automaker billions in bailout money, wants severe cost cuts.
"The government requires that we be a viable entity even in this market, which is the worst that the automakers have seen since World War II. Yet they say you have to be profitable," said GM spokesman Peter Ternes. "That means that everything has to be downsized to that new model. And that means you can't have too many plants, or too many brands."
Dee DePass • 612-673-7725
