Axed ChryCo Dealers Strike Back; Price Crash Coming, Regardless

Robert Farago
by Robert Farago
axed chryco dealers strike back price crash coming regardless

Automotive News [sub] reports that Chrysler’s national dealer council has filed a motion in U.S. Bankruptcy Court to “save” the 789 ChryCo dealerships slated for termination. The council’s asking federal judge Arthur “Fast Track” Gonzalez to stay Chrysler’s dealercide in the name of Joe Q. Public. “Fewer dealers will mean less inventory available to the public,” the document maintains, placing Chrysler products on the same level as, say, foodstuffs. “Lower inventory reduces the chances that a customer will find the car they are looking for and therefore hurts sales.” A federal ruling to protect consumer choice in an industry with 40 percent plus overcapacity and enough excess inventory to choke an entire industrialized country? That’s just silly. Arty is scheduled to hear objections to Chrysler’s request on June 4, five days before the axe falls for good (or, in this case, “bad”). Never mind. Here’s where the REAL battle lines are forming . . .

Chrysler will not buy back the inventory and parts of the rejected dealerships. Instead the automaker will recommend dealerships that might be willing to buy the inventory. Chrysler wants to move the 44,000 vehicles at the targeted dealerships to surviving stores rather than see them go to auctions and used-car lots.

Huh? “Recommend?” Who sets the price for the unloved, unwanted and aging vehicles? Does “bad” Chrysler sell “good” Chrysler dealers at some hellacious discount, and then prevent them from passing on the savings to consumers? Seriously, how is this going to work, and why do I feel like Uncle Sam is going to end up bankrolling the boondoggle?

CBS has Chrysler’s official answer: the bankrupt automaker’s pre-C11 production shut-down has created / will create a product shortage. In other words, the surviving Chrysler dealers will want to mop-up the closed dealers’ inventory. Or, thinking about it another way, Chrysler won’t build squat for their remaining dealers until and unless they take on those excess units.

Sales in May have been stronger than anticipated, so dealers will need to replenish inventories, [company spokeswoman Kathy Graham] said.

“They’re not building anything right now, so they’re kind of creating a little bit of a product shortage,” Hollern said. “So, surprisingly, a lot of the dealers who have gotten new contracts to go on with the new Chrysler will be looking for new inventory.”

Then again . . .

Dale Horn, owner of a Chrysler-Dodge-Jeep dealership in Malvern, Ark., whose franchise was cut, isn’t counting on any help from the company to unload his inventory of 34 vehicles.

“Right now, I don’t have much confidence that they will do what they say. Nobody’s called me yet saying they’re going to try to help me,” [Dale Horn, owner of a Chrysler-Dodge-Jeep dealership in Malvern, Ark.] said.

Still, he’s determined to sell the cars and trucks before June 9, and he’s not ruling out selling at a loss.

“It’s not a matter of ‘if.’ We will sell them all,” Horn said.

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2 of 43 comments
  • Rottenbob Rottenbob on May 18, 2009

    I visited one of these lame-duck dealers this weekend, in Tacoma, WA. They didn't want to sell. Their advertised price for a 2009 Jeep Patriot base (crank-handles windows, etc.) was 18,006. And they were NOT budging! The salesman said the price was not negotiable. WTF?! 15 minutes later I was down the street at the Suzuki dealership, sitting in a much nicer and better-equipped Grand Vitara that had a lower sticker price and available incentives. Gee, I may not buy a Patriot after all... I'm beginning to see why Chryco inventory is piling up: the dealers don't have a clue what their products are truly worth.

  • on May 22, 2009

    [...] minutes later I was down the street at the Suzuki dealership, sitting in a much nicer and better-equipped Grand Vitara that had a lower sticker price and available incentives. Gee, I may not buy a Patriot after all… … [...]

  • Wolfwagen Didnt these have an iPad for the owners manual?
  • Ollicat Another crazy thing to consider is insurance. I found out a modest NEW car with all the new safety add-ons will cost $1000 a year less to insure than a 10 year old beater, when insuring teenagers.
  • Dukeisduke Avoid the Ford Windstar at all costs, especially if has the Essex 3.8l V6. Besides the Essex V6, these things had terrible rust problems with the front subframe (if you live someplace where things rust), the automatic transmissions had big problems, and the rear twist beam axle had a tendency to fracture, literally killing some drivers.
  • TMA1 I did an audit of a major Korean chaebol a decade ago, and this is the car they sent every day to pick me up. That back seat was the place to be. Especially on the passenger side with the reclining chair and footrest. I always wanted to get one for myself, but couldn't afford the driver needed to fully enjoy it.
  • Dukeisduke Add audible commands, like, "Stop tailgating, you moron!", and, "Slow down - you're gonna kill us all!" I was going to suggest using the voices of Tom and Ray Magliozzi, but sadly, only Ray is still with us (RIP, Tom).