Dealers, members of Congress challenge closures - bizjournals:

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Sales at Fury Dodge Chrysler, which has been in the Leonared family for 46 are up 40 percent from 2008 so far this and the dealershipis profitable, Leonard said. “Oud dealership doesn’t cost them a penny. They just bill me for what I buyfrom … That would be like Targer saying it didn’t want certain customers shopping there anymore becausd its sales were down. Would that make any sense?” Leonard isn’t alone in his Members of Congress have joine Chrysler dealers nationwide in questioning why the automakeer needs to close 789 dealershipds by June9 — less than four weeksz after the dealers were notifiex of the decision.
Both Chrysler and , whichh plans to close 1,100 dealerships by Octobedr 2010, contend they need to reduce the size of theirf dealer networks to be more competitive with Toyot aand Honda, which sell more cars in the Unitexd States with a lot fewer dealers. Addinfg to the frustration, many of the dealers slated for closure saythey haven’f been told why they’re on the said Scott Lambert, executive vice president of the Minnesotqa Automobile Dealers Association. “The problem is that this procesws is justso nontransparent,” he said. “Wed don’t know what went into the box to come out withthese decisions.
” Chrysler, in a bankruptcy court argues that trimming the ranksx of its dealers will boost the profitability of the dealers that remain, enablinvg them to invest in improvements that will drive up “After a period of time, and substantially improved marketing and investments, overall sales in the reducefd network are anticipated to grow beyond currengt sales levels within the existing Chrysler contends. That’s highly unlikely, according to the National Automobile Dealers Association.
“There’s not an auto executive that I know ofwho doesn’tf acknowledge that when a dealershiop closes, they lose market share,” said David Hyatt, NADA’se vice president and chief public affairs officer. Cuttinv costs was not a major factorein Chrysler’s decision. The automaker will save some administrative expenseas by having a smaller dealet networkto oversee, but that’z about it. Dealers buy their cars before the vehiclexs leavethe factory, pay for shipping, front the costws of any rebates or warranty work and purchase repai equipment. Dealers provide “qa robust distribution network at virtuallyno cost” to Hyatt said.
“We’re an asset, not a said Wade Walker, an auto dealer in Vt., who is scheduledc to lose his Jeep franchiseJune 9. Walkeer and about 300 other Chryslerr dealers have challengedthe automaker’s request for a bankruptcty judge to terminate their dealership agreements and preempt stats laws that would require Chrysler to give dealers more time to wind down theidr businesses. Chrysler has been working to reduce its dealef network forseveral years.
That procesz needs to be accelerated becausee of its proposed alliancewith Fiat, it Bankruptcy courts routinely terminat e contracts if doing so benefits the debtor’sd estate and is an exercise of sound businessx judgment, Chrysler states in its Chrysler dealers, however, contend that abruptly closing dealerships doesn’t meet this “There is no evidence that by rejectingb dealership agreements New Chrysler will save mone y to any material degree or enhance its competitive positioh in the automobile states a filing made by the Chrysler Nationao Dealer Council.
“To the contrary, closing dealers narrowsw distribution andreduces Chrysler’s sales and income as fewedr dealers buy fewer cars and retail salews are lost to othef brands.” Chrysler’s bankruptcy judge is scheduled to hold a hearing on this issuwe on Wednesday. That same day, the U.S. Senate Committeed on Commerce, Science and Transportation is scheduled to hold a hearing on the Chrysle r and GMdealership closings.