(Bloomberg) -- A half-century of Chrysler car sales ended when Eldon Howe received a delivery from United Parcel Service Inc.
That’s how Howe learned that his Beacon Sales Inc. in Charlotte, Michigan, was among the dealers targeted to be shuttered as bankrupt Chrysler LLC prunes its retail outlets in a restructuring led by Italy’s Fiat SpA.
“We got the letter today from UPS,” said Howe, 78, who founded Beacon 55 years ago in the central Michigan city about 110 miles (177 kilometers) west of Detroit. “I’ve done this all my life,” he added. “I haven’t done anything else.”
From Virginia to California, Chrysler’s decision to cancel 789 dealership agreements forced franchisees to assess what they’ll do next, prepare to dismiss employees and ponder how to wind down decades-long relationships with their customers.
The reductions represent about 25 percent of the 3,200 Chrysler, Dodge and Jeep-brand dealers. Those who survive stand to gain business as their ranks are thinned. Those on the cut list will be gone by about June 9, Chrysler said.
“I’m worried about the people in this town, they don’t want to go somewhere else to buy their cars,” Howe said. “And what about the people who have already bought cars from us? We won’t be able to take care of the service for them.”
In Seaside, California, fourth-generation dealer Donald Butts will lose the Jeep brand from his Pontiac-Cadillac-Jeep store on June 9.
‘Walking Away’
“I cannot see how this will help them recover, walking away from entire markets,” Butts said in a telephone interview. Butts, who declined to give his age, said his family began selling General Motors Corp.’s Buicks in 1907 and took on Jeep about 25 years ago.
Shrinking the number of dealers is intended to ensure profitability for the remainder, President Jim Press said on a conference call. Stronger dealers help Auburn Hills, Michigan- based Chrysler by investing their properties, selling more vehicles and satisfying buyers with well-run service departments, Press said.
Chrysler culled mostly among retailers that had annual sales of 100 or fewer vehicles; sold just one Chrysler brand; or carried Chrysler vehicles along with those of other automakers, he said.
Buying Inventory
Surviving dealers will be urged to purchase autos and supplies of replacement parts from those being closed, Press said. Dealers on the list collectively accounted for 14 percent of the company’s sales, Press said.
Job losses, which Chrysler said it didn’t estimate, will be part of the fallout.
In Michigan, Howe said he planned to tell his 14 employees today about the company’s announcement. Butts, the California dealer, said at least three service technicians would have to find work elsewhere. He owns another dealership selling Honda Motor Co.’s Acura brand and wouldn’t say how many of his 39 employees would be affected.
John Gunning, 69, was among the dealers on the shutdown list who said he saw the move coming because his Manassas Dodge in Virginia sells only one of Chrysler’s three brands.
“There are still a lot of things up in the air,” said Gunning. “Obviously I am disappointed, but I’m not amazed.”
Gunning used to be on Chrysler’s national dealer advisory board. Last month, his dealership was the top-selling Dodge outlet in Northern Virginia. He also owns a dealership for Fuji Heavy Industries Ltd.’s Subaru, which he will keep open, he said.
“I’m not convinced Chrysler is going to make it anyway,” he said. “I just want to try to save my Subaru franchise.”
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Thursday, May 14, 2009
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