Thursday, May 14, 2009

Chrysler Axes 789 Dealers
(GM to cut 1,000 Dealers by Friday)

Chrysler published a list of 789 dealers whose franchises are being terminated effective June 9. The list is posted here at Among the excised dealers will be Palmer Dodge Chrysler Jeep, the Dodge dealer closest to my office. In other words, I know don't have a bat's chance in hell at getting my car into the shop and getting to the office in a reasonable time. I don't understand the logic of thinking that you can sell more cars with fewer dealers. Granted too many dealers is a problem, but it's not nearly as bad as not having ENOUGH dealers.

I can understand the argument that if a company is going to go in and out of bankrutpcy within a short period of time (2 months), it has to act decisively in cutting dealer ranks down to a sustainable level. After all, bankruptcy may be the only way to cut dealers without paying them huge compensation. This rationale is less compelling when the bankrupcy process is not going to be quick. Yesterday it was disclosed that Chrysler's 2 month bankruptcy plan is looking more like a 2 year plan.

This Chrysler bankruptcy seems to be turning into a fiasco of major league proportions, Saving the company in name isn't saving jobs at the dealer level, isn't keeping suppliers from filing bankruptcy and laying off employees, and isn't saving employees from being financially ruined as their plants close temporarily and permanently. Chrysler is using our taxpayer money to advertise vehicles that don't exist and to try to preserve sales channels for imported Fiats. In the meantime, huge Chrysler discounts are contributing to an incentive war where 25% of the vehicles are being sold below dealer cost. Although it's good for current buyers, this kind of discounting is unsustainable.

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