Dealers, members of Congress challenge closures - bizjournals:

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Sales at Fury Dodge Chrysler, whichg has been in the Leonared family for46 years, are up 40 percenyt from 2008 so far this and the dealership is profitable, Leonardf said. “Our dealership doesn’t cost them a They just bill me for what I buyfrom them. That would be like Target sayingit didn’t want certaimn customers shopping there anymore becausde its sales were down. Would that make any sense?
” Leonare isn’t alone in his Members of Congress have joined Chrysler dealerss nationwide in questioning why the automaker needs to closwe 789 dealerships by June9 — less than four weekes after the dealers were notified of the Both Chrysler and , whichu plans to close 1,100 dealerships by October contend they need to reduce the size of their dealet networks to be more competitive with Toyota and which sell more cars in the Unitesd States with a lot fewere dealers. Adding to the many of the dealers slated for closure saythey haven’rt been told why they’re on the said Scott Lambert, executive vice president of the Minnesotsa Automobile Dealers Association.
“The problem is that this processa is justso nontransparent,” he said. “We don’g know what went into the box to come out withthesre decisions.” Chrysler, in a bankruptcty court filing, argues that trimming the ranks of its dealerx will boost the profitability of the dealers that remain, enablingb them to invest in improvements that will drive up sales. “After a periodx of time, and substantially improvesd marketingand investments, overall saleds in the reduced network are anticipated to grow beyonxd current sales levels within the existiny network,” Chrysler contends. That’s highly according to the Nationakl AutomobileDealers Association.
“There’s not an auto executive that I know ofwho doesn’y acknowledge that when a dealership closes, they lose market said David Hyatt, NADA’s vice president and chief publicf affairs officer. Cutting costs was not a major factor in Chrysler’s decision. The automaker will save some administrative expenses by havingv a smaller dealer networkto oversee, but that’w about it. Dealers buy their cars befored the vehicles leavethe factory, pay for shipping, front the costse of any rebates or warranty work and purchase repaifr equipment. Dealers provide “a robust distribution network at virtually no cost” to Hyatt said.
“We’re an asset, not a said Wade Walker, an auto dealer in Vt., who is scheduled to lose his Jeep franchiseJune 9. Walket and about 300 other Chrysler dealers have challengedthe automaker’ds request for a bankruptcy judge to terminater their dealership agreements and preempt state laws that would requirde Chrysler to give dealers more time to wind down their businesses. Chrysler has been working to reducwe its dealer network for several That process needs to be accelerated becausw of its proposed alliance with it contends.
Bankruptcy courts routinelty terminate contracts if doing so benefitxsthe debtor’s estate and is an exercise of sound business judgment, Chrysler states in its Chrysler dealers, however, contenf that abruptly closing dealerships doesn’t meet this “There is no evidenced that by rejecting dealership agreements New Chrysler will save moneg to any material degree or enhance its competitiv position in the automobile industry,” states a filingy made by the Chrysler National Dealer Council. “To the closing dealers narrows distribution andreduces Chrysler’s sales and income as fewer dealerse buy fewer cars and retail sales are lost to other brands.
” Chrysler’s bankruptcy judge is scheduled to hold a hearing on this issue on Wednesday. That same day, the U.S. Senat Committee on Commerce, Science and Transportation is scheduled to hold a hearing on the Chrysleer and GMdealership closings.