Show below in the scrollable 40 page document published here using embedded code, and the full version available by downloading the attached PDF at the bottom, is the the list of 789 dealers that Chrysler has petitioned the US Federal Bankruptcy Court for authorization to close by June 9.
This is an incredibly sad day for the auto industry, to get a court order to shut down 789 Chrysler, Jeep and Dodge dealerships seems to make sense until you start a conversation with any of the thousands of people employed by these dealership. The list of mandatory store closures is shocking in that so many historically successful dealers are on it...
I was thinking about the incredible indignity of that Chrysler "Kill List" and came up with a concept... What do think about a new dealer network comprised of those dealers who choose to participate who were de-franchised by either Chrysler or GM?
Not sure what it would be called... Someone smarter than me would work on the concept, but the consumer value would be in a national organization with requirements for things like used car warranties, honored at any of the 1,000+ participating dealers... Shared inventory websites with search engine to find the car/truck you want... Dealer trades for used cars that met the new network's requirements... Trade-in values that are good at any participating dealer (like CarMax)... In fact, that would be the model to look at, the CarMax model which has been quite successful for CarMax...
Do you think that something like that would appeal to both the shunned dealers and the car buying public?
If so, well... These sort of future success stories usually start just like this... The spark of an idea followed by people in power adopting it. And, THAT is the kind of thing I seem to be good at!
My family lost a chrysler and a chevy store this week. I've had a similar concept for a website that would house all the dealers' inventory in our town in order to encourage people buying local. Some people thought it would be anti-competitive, but I think it would be just the opposite. I think the only way to keep people employed at our stores, would be to go with a carmax model. First things first for us however, is figuring out how to move these new chryslers and chevrolets. Chrysler only gave us less than a month. Then we are stuck with new cars with no rebates. They are not helping us move parts either. Chevy on the other hand, is at least giving us a full year. We need to form a group of affected dealers on that issue first.
The contracts were sold and assigned so the vendors are out of the line of fire and there is no recourse against them. The dealers are responsible but hopefully they did not sign a personal guarantee - which most did not. The dealerships that stay open will still have the debt and it is collectable. If they close, or declare their own Chapter 11 Bankruptcy, the contract liabilities would be discounted by the court like any other payable. The bank then eats the loss but now that they are owned by the administration the end loser is you and I. What a country!
Well everyone i say we reach out as a community and help there are some very talented people at these's stores that could put some other stores on the map so to speak i say if you know of any friends at these's stores get in touch with them and give them a boost they need it we all have been in the car buisness for sometime and it only makes great sense to me to help another car guy out we have never faced anything like this and we will all be fine when the fall out is all over we just have to help eachother and work smarter than ever before Bill
Federal law always trumps State law, but this is a sad day.
I thought everyone would be interested in the following excerpt from the Chrysler Bankruptcy Filingshttp://www.chryslerrestructuring.com
Hearing Date and Time: June 3, 2009, 11:00 a.m. (ET)
Response Deadline: May 26, 2009, 4:00 p.m. (ET)
Preliminary Statement1 (Page 6 paragraph 9)
9. Other than certain sales to the government, virtually all of the vehicles
manufactured by the Debtors are sold to the U.S. general public through a network of authorized
dealers (the "Domestic Dealer Network"). (See Grady Decl. at ¶ 6.) Over the years, this
Domestic Dealer Network grew to cover all 50 states, peaking at approximately 6,500 dealers in
the mid-1960s, which has subsequently declined over time. (Id.) Although the Debtors' large
and extensive Domestic Dealer Network provides increased outlets for the sale of the Debtors'
products, its size and scope has created significant challenges as market conditions and
demographic factors have changed over time. (Id. at ¶ 10.)
10. For example, the Debtors' dealers compete not only with dealers selling
the products of other Original Equipment Manufacturers ("OEMs"), such as Ford and Toyota,
but also with each other in surrounding markets. Some of the Debtors' dealers may have only
one linemake (for example, Chrysler, Dodge or Jeep), while others have all three linemakes.
Thus, a Chrysler-Jeep dealership may compete with a nearby Dodge dealership. For example,
a Chrysler dealer may sell Chrysler Town & Country minivans and a nearby Dodge dealer may
sell Dodge Caravan minivans, which may compete for the same customers. (Id. at ¶ 10.)
11. Over time, the market for new motor vehicles has changed dramatically.
Numerous other competitors selling a wide variety of vehicles, including Toyota, Honda,
1 In further support of this Motion, the Debtors hereby submit the Second Declaration of Peter M. Grady,
attached hereto as Exhibit B and incorporated herein by reference (the "Grady Declaration").
Hyundai and Kia, have entered the market and captured a larger share of the automotive market.
As a result, the larger Domestic Dealer Network has faced increasing financial pressures on
profitability as the market share of the Debtors and other domestic OEMs declined over time in
the face of increasing foreign competition. With so many outlets available for the Debtors'
products and more limited market share, many dealers' annual sales of vehicles (or "throughput")
fell below targeted levels, limiting dealer profitability and the ability of many dealers to reinvest
in the dealership and enhance the experience of consumers. (Id. at ¶ 12.)
12. In addition, as suburbs grew and the modern interstate system continued to
evolve, longstanding dealerships no longer were in the best or growing locations. Many rural
locations also served a diminishing population of potential consumers. Some dealership
facilities became outdated. Other locations faced declining traffic count and declining
populations. (Id. at ¶ 12.)
13. By contrast, the newer OEMs selling competing vehicles, such as Toyota,
Honda, Hyundai and others, did not enter the U.S. markets or did not significantly expand within
U.S. markets until much later in time. They did not have the legacy network dealers. They
began to assemble new networks with new and better locations in growing markets, with
numerous models consolidated under a single roof, with more modern facilities, focused on large
metropolitan areas. (Id. at ¶ 13.)
14. Over time, the throughput of the newer OEMs continued to grow while the
throughput of the Debtors continued to decline. On average, the dealers for several of the newer
OEMs now have substantially higher throughput, resulting in better and more sustainable sales
and profitability and providing greater resources for marketing, reinvesting in the business,
improving facilities and enhancing the consumer experience and customer service. (Id. at ¶ 14.)2
In addition, such larger throughput supports substantially higher average profits for competitive
dealerships, enables competitors to often attract the more experienced and highly qualified
personnel from the Debtors' Domestic Dealer Network, and enables those dealers to offer extra
services and benefits that can improve customer satisfaction for the brands offered. (Id. at ¶ 15.)
15. The Debtors' larger Domestic Dealer Network also substantially increases
expenses and inefficiencies in the distribution system, forcing the Debtors to spend additional
resources on training, new vehicle allocation personnel, processes, and procedures, oversight of
the Domestic Dealer Network, auditing and monitoring expenses for dealer operations, and all of
the other operational expenses that must be incurred to maintain, support, facilitate and oversee a
larger dealer network. In addition, the numerous "partial line" dealerships in the Domestic
Dealer Network requires the continued production of overlapping models under different brands,
which further increases unnecessary costs and introduces substantial inefficiencies in the
distribution system. In sum, the smaller, more efficient, more profitable dealer network for the
transplant OEMs has become a competitive disadvantage for the Domestic Dealer Network.
(Id. at ¶ 16.)
16. The Debtors have been actively addressing their dealer network issues for
a number of years. As part of their ongoing business plans, the Debtors have engaged in a long
term process to rationalize their dealer network. The goals of this effort included working with
2 In 2008, the Debtors sold approximately 1,000,000 new vehicles through approximately 3,298 dealers. The
average throughput for the Debtors' dealers was approximately 303 per dealer. In 2008, Toyota sold
approximately 1,604,952 new vehicles in the United States through approximately 1,242 dealers. The
average throughput for Toyota's dealers in the United States was approximately 1,292 per dealer. In 2008,
Honda sold approximately 1,255,411 new vehicles in the United States through approximately
1,030 dealers. The average throughput for Honda's dealers in the United States was 1,219 per dealer.
(Grady Decl. at ¶ 14.) Thus, the throughput for Toyota and Honda dealers is approximately 415% higher
than the average throughput of the Debtors' dealers. (Id. at ¶ 15.)
the dealers to consolidate all three of the Debtors' brands at each dealership and reshape the
network to realign the retail outlets using the best dealers, in the best locations, with the best
facilities. This process has been time-consuming and expensive as a result of a complex web of
state laws (as defined more specifically below, the "Dealer Laws") that protect dealers and limit
the ability of the Debtors to expeditiously terminate, relocate or consolidate dealerships.3
Despite these obstacles, and at substantial cost, the Debtors have reduced their dealer network
from approximately 4,320 dealers in 2001 to 3,181 as of the Petition Date. These efforts are
ongoing. As part of their prepetition long-term viability plan (as further defined in the Kolka
Affidavit, the "Viability Plan"), the Debtors identified the completion of their dealership
rationalization efforts as one of the core initiatives. (Id. at ¶ 17.)
17. As explained in detail in the Kolka Affidavit, consistent with their
Viability Plan, the Debtors are seeking to obtain approval of and implement the Fiat Transaction
or another transaction with a competing bidder to sell their assets on a going concern basis (any
such transaction, a "Sale Transaction").4 Recognizing the importance of completing a Sale
Transaction as expeditiously as possible, the Court entered an order on May 7, 2009 (Docket
No. 492) (the "Bid Procedures Order") approving a sale process culminating in a sale hearing to
be conducted on May 27, 2009 to consider the Fiat Transaction or a competing transaction.
A key component of the Fiat Transaction is the transfer to New Chrysler of a strong,
well-positioned dealer network to continue selling Chrysler, Dodge and Jeep vehicles to
consumers and to service these vehicles. (See id. at ¶ 18.)
3 These Dealer Laws began coming into effect in the 1980s.
4 The Fiat Transaction is described in greater detail a separate motion to approve this sale, or a similar sale to
a competing bidder, filed by the Debtors on May 3, 2009 (Docket No. 190) (together with the supporting
memoranda and affidavits, the "Sale Motion").
18. To that end, the Fiat Transaction contemplates and, in fact, requires the
acceleration of the Debtors' network rationalization.5 This effort to strengthen the Domestic
Dealer Network is a critical component of the proposed Fiat Transaction both to improve the
viability of the Domestic Dealer Network and position New Chrysler for viability and long-term
success. (Id.) Such effort also is expected to be important in any alternative Sale Transaction
involving the Domestic Dealer Network. The consummation of such a sale, including the further
rationalization of the Domestic Dealer Network, will materially benefit the Debtors' estates,
maximize the value available to stakeholders and provide substantial benefits to the remaining
19. As a result, the Debtors have determined, in a sound exercise of their
business judgment and after an extensive analysis and consultation with New Chrysler, to
exercise their right to reject 789 dealership agreements and related ancillary agreements,
pursuant to section 365 of the Bankruptcy Code.
20. Moreover, given (a) the complexity and urgency of the transactions
involved, (b) the number of dealers and other parties impacted by this Motion, (c) the need for
the Debtors to move quickly to implement the requested relief through affirmative actions in the
marketplace and (d) the possibility of disputes regarding the impact of rejection on the
implicated commercial relationships and related legal rights, the Debtors believe that it is
essential for the Court to issue related rulings to ensure that the Debtors obtain the full and
immediate benefit of rejection. There is little precedent for the bankruptcy of a major OEM, and
5 Pursuant to the Purchase Agreement and the Bid Procedures Order, New Chrysler has the right to identify
which executory contracts and unexpired leases will be assumed by the Debtors and sold and assigned to
New Chrysler as the purchaser. Consistent with the Viability Plan and business analyses described herein,
New Chrysler has made a determination not to take an assignment of the agreements addressed by this
The entire motion can be downloaded in pdf format attached as well as a filing lisitng the top 50 creditors from: http://www.nysb.uscourts.gov
Franchises on the Chrysler dealerships closing list have already been informed of their fate. That includes the oldest car dealership in Chicago and Island Jeep Lindenhurst in New York.
“My franchise was basically stolen from me, and it’s gonna be given to a dealer down the street for free,” said James Anderer, owner of Island Jeep Lindenhurst, N.Y. “I have 48 people here who are going to be unemployed. We didn’t do anything wrong, but we’re being punished. Chrysler won’t even take the cars back. So the 100 cars I have in inventory I have to retail out of them in the next couple of weeks, either throw them in a Dumpster or sell them for pennies on the dollar. And Chrysler got a bailout. I’m not asking for a bailout. I don’t need a bailout. I run my business properly.”
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