Chrysler going bankrupt
Posted By J.T. on May 23, 2009
from the Cass County Democrat-Missourian:
Cratering Chrysler culls 789 dealerships, Cass County feels the pain
Mark Webber
At 10 a.m. last Thursday, the Milner-O’Quinn Chrysler Dodge franchise in Harrisonville received an ugly letter delivered by UPS.
It read, in part, “With regret, this letter is to inform you that on May 14th, 2009, we are filing a motion in bankruptcy court rejecting the Sales and Service Agreements between Chrysler Motors LLC and the dealership listed above. Upon approval from the court, your agreement will be rejected on or about June 9, 2009.
“We intend to maintain ‘business as usual’ with you until the rejection takes place. We intend to honor warranty and incentive payments, during the period that remain an active dealer subject to available financing. It is necessary to work together to make this transition as seamless as possible to your customers. After rejection, we want to work with you to assist in the redistribution of new vehicles and parts to ease the burden on you.”
A concluding statement near the bottom of the letter read, “We wish there was a better way, but there isn’t.”
Scott Milner, vice president of the dealership, sounded shell-shocked in a brief phone interview the following day. Calls from concerned customers had been coming in nonstop. Asked to interpret the letter he replied, “Supposedly, we can continue doing warranty work until June 9.”
Chrysler pointed the finger of blame at “unprecedented decline in the industry (having) had a significant impact upon sales” and claimed in the letter’s intro the company is required “to better match ongoing demand.”
Milner described the tone of the letter as very matter of fact, but harbored concerns about how to handle all the remaining inventory.
According to Automotive News, Chrysler, now under bankruptcy court protection, will not be required to buy back vehicles, tools or parts from rejected dealers. Instead, according to Automotive News and Milner, Chrysler is supposed to match the 789 rejected dealers with accepted dealers who, in theory, will be in a position to buy the inventory. Milner had reservations about the plan because the remaining dealers simply may not have the available capitol, credit, good will, or consider such a purchase a smart business move, to buy excess Chrysler inventory.
“Nobody has had the chance to digest the business plan,” Milner said. “Is it a good plan? We don’t know. The public ends up losing, though.”
Then Milner vented asking, “Is America supposed to be this way? Where is the responsibility?”
As for immediate impact to the dealership Milner said, “We’ve been downsizing over the past year-and-a-half to two years. We’re going to try and keep operating with our current staff and are doing what we have to try and make that happen.”
The National Automotive Dealers Association estimated Chrysler’s dump will result in the loss of more than 37,000 jobs. NADA’s figures are calculated using an estimate of 48 workers per dealership.
When asked about the dealership’s short-term plans Milner said, “We’re going to keep forging forward,” and expressed confidence in the future of their other franchise product lines, Ford/Lincoln/Mercury, as well as confidence in Ford management. In addition, Milner said as used car sales are up, the dealership will grow that part of the business.
Milner wants Chrysler owners to know that after the cut-off date warranty issues will have to be resolved at existing dealerships. In fact, according to Automotive News, “About 4 million customers of rejected dealers, orphan owners, will get letters explaining the situation. Chrysler says it won’t abandon retail customers and will pay for ‘towing services, etc.’”
Reported Sunday via Automotive News, Chrysler’s national dealer council has filed a motion in U.S. Bankruptcy Court to save the 789 dealerships slated for termination.
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