« | »

Judge: Chrysler Doesn’t Need Dealers

From an understanding Reuters:

NY judge: Old Chrysler has little need for dealers

By Tom Hals

NEW YORK (Reuters) – Chrysler will have little need for the hundreds of dealers it wants to close if it completes its sale to Fiat as expected, the judge overseeing the automaker’s bankruptcy said on Thursday.

Earlier this week, Judge Arthur Gonzalez approved the sale of most of Chrysler’s assets to Italian automaker Fiat SpA. The 789 dealerships that are slated for closure will remain in bankruptcy with the "Old Chrysler," which also includes unwanted factories.

At the start of hearings in Manhattan’s bankruptcy court on a motion to close the dealerships, Gonzalez said once the Fiat sale closes, he did not see how the bankrupt business would need a dealer network.

"Absent a car manufacturing business, the dealerships would not seem to serve any purpose for the debtor," Gonzalez said, but added there may be a case for the dealers to pursue damages.

Chrysler filed for bankruptcy on April 30 and said about two weeks later that it was shutting a quarter of its dealer network. The company said it wanted to slim down the number of stores to better match the dramatic drop in sales, which have fallen more than 40 percent during the recession.

The dealers want to show that Chrysler did not use sound business judgment in choosing the dealers to close.

In bankruptcy court hearings last week on the Fiat sale, Chrysler executives said they wanted fewer, more profitable dealerships that could invest more in their locations and could compete better with rival automakers’ dealers.

The executives also said they want to combine single-brand dealers under one roof offering Chrysler, Dodge and Jeep vehicles.

At Thursday’s hearings, dealers from New York and Florida testified about the relative strength of their businesses in an attempt to show Chrysler was not closing its weakest locations.

A "New Chrysler" will emerge from bankruptcy in a few days, pending an appeal of the Fiat sale. The 789 dealers will be severed from Chrysler on June 9. Some will remain open to sell used cars.

So the ‘New Chrysler’ that will emerge will not be making cars?

This article was posted by Steve on Thursday, June 4th, 2009. Comments are currently closed.

13 Responses to “Judge: Chrysler Doesn’t Need Dealers”

  1. MinnesotaRush says:

    “Chrysler will have little need for the hundreds of dealers it wants to close..”

    I’m feeling as though a sister headline could read “The citizenry has little need for hundreds of dumbass judges …”

    These dealers were autonomous businessman and women who employed people and had a MAJOR investment in their businesses .. and who GOT SCREWED!!!

    • JohnMG says:

      …..”I’m feeling as though a sister headline could read “The citizenry has little need for hundreds of dumbass judges …”

      I’m feeling as though a sister headline could read, “The citizenry has little need for hundreds of milions of dollars Obama gave to the UAW as payback …”

  2. proreason says:

    Well then, why advertise, why have engineers, designers, and executives.

    It’s the perfect Obamanized business. No tacky products. No nasty profits. No clinging customers.

    Why, we’ll just save ALL the expenses, and have everybody making over $75K a year just make payments for their virtual cars directly to the Obamy voters auto workers.

  3. curvyred says:

    So people will just mosey on up to the factory to purchase their vehicles then?

    • JohnMG says:

      From the sound of things, you’ll probably have to book a cruise to the Mediterranean to get to the factory. Makes driving the thing home a daunting task. One not for the faint of heart.

      Sort of a ‘Fiat accompli’ you might say. ;-}

    • DW says:

      Sort of a ‘Fiat accompli’ you might say. ;-}

      Groan… Just ban him, Steve.
      This site is no place for Jeep shots like that.

  4. Douglas says:

    I went to visit my Chrysler dealer today. I’ve been a Mopar guy for a long time and have a good relationship with the guys in the service department. Come next Monday they’re done. There’s a lawsuit pending, but they’re not particularly hopeful. They have a stockroom full of parts and next week they get orphaned from the dealer network, so they can’t charge for warranty work using those parts and they won’t be able to cross ship them to other Chrysler shops.

    The rumor they’ve heard is that it’s the non-union shops that got the axe as a sop to the UAW.

    At the very least, no one has managed to explain how reducing the number of dealers makes any economic difference to Chrysler.

    • curvyred says:

      There are some excellent research pieces looking into exactly why certainly dealers were chosen to close and others were saved from the chopping block.


    • jobeth says:

      I have no inside knowledge, so this is only my opinion. But I don’t think this came from the “old” Chrysler org. I think this is mandated right out of the Obalmy/UAW/Chrysler partnership.

      When you sell your soul to the devil…Chrysler shouldn’t be surprised when he demands your life.

      The whole Chrysler/GM think is to weaken our economy from the front, back and through the ordinary workers…who lose their jobs and thus can’t buy…again furthering the weakening of the US economy.

      You can’t rationalize their actions unless you understand their intent

    • JohnMG says:

      …..”The rumor they’ve heard is that it’s the non-union shops that got the axe…..”

      This same thought crossed my mind today, and it wouldn’t surprise me in the least. That, and those dealerships that made campaign donations to Republican candidates are bearing the brunt of the closings. The oldest son of one of my friends is a service writer for a MOPAR dealer. He’s losing his job and his seniority because the dealership is closing, and he’s super-pissed off. Guess what? He, his dad, and the whole family voted for the O-hole–but it’s all Bush’s fault. They’re completely clueless. When I mention anything at all concerning the crap Obama is pulling they get like little kids plugging their ears and stamping their feet. It’s put a strain on the friendship, but I look on it as I would a self-inflicted gunshot wound. It’s not my fault. I lost in November so don’t tell me about it. Maybe I should call for a waaaaaaaaaambulance, eh?

    • jobeth says:

      “When I mention anything at all concerning the crap Obama is pulling they get like little kids plugging their ears and stamping their feet”

      I have a ‘friend’ at church who really goes off if she hears ANY thing pro conserv or against Obalmy. I mean shouting and sputtering!

      I’m going to a nearby theater tonight to watch Beck. I halfway thought I should take her…but then I don’t want to spoil our night! OK, so I didn’t REALLY think of including her…just the vision of her anger would be enough to kill that thought! Don’t think she would be able to handle that much truth in one sitting. LOL

    • proreason says:

      I’m interested in this as well. It’s hard to think of business reasons to close down distributors.

      If there are some significant costs that Chryler bears, I would be curious to learn what they are. I can think of some small things like having to deliver vehicles to more places and havving to send trouble-shooters to more locations, and train at more locations, but those seem small to me relative to a multi-billion dollar business.

      Maybe it has to do with brand dilution or some other esoteric marketing mumbo jumbo.

      But like the rest of you, it smells to me like it’s The Obama Mob punishing its enemies and paying off it’s knee-breakers.

      I really think it’s a signal to American business to either get on board the fascist express, or get out of town.

  5. TwilightZoned says:

    “…get on board the fascist express…”

    Exactly what I was thinking.

« Front Page | To Top
« | »