Posted on 05/13/2009 4:41:31 AM PDT by yankeedame
WHIO Local News
DETROIT, Mich. - The United States' third-largest auto-maker announced Thursday that it will be telling some of its dealerships the same thing Donald Trump tells his apprentices: "You're fired."
American auto manufacturer Chrysler says it will cut 800 of its 3,200 dealerships and renegotiate deals with the remaining 2,400 as part of its bankruptcy plan. The names of the "fired" dealerships are expected to be released on Thursday.
Pierre Bergeron is an attorney in the Cincinnati office of Squires Sanders, a law firm that is seeking to represent dealers that Fiat and Chrysler want to drop. He indicates that surviving dealers will be identified in a court filing in New York.{Due out tomorrow, Thursday,May 14th)
As one dealer commented, "I don't know that there is any good news whether you're on the list or not on it."
One out of four dealerships to suddenly close and GM will follow. Doesn’t sound like a green shoot to me.
Dealers can be fired, but unionized workers must be bought out.
1st AIG Bonuses.
2nd the Chrysler Bond Holders.
This is the 3rd, and the reason GM never went forward with shedding brands, more than contract law, we are taking franchise law and the rights of both parties.
Welcome to the New-Facista....
Yeah, this is the change I was looking for. /S
Sure glad I won’t be need to be looking a new vehicle for several years.
I've been busy, where'd this "green shoot" meme come from?
I saw a Chrysler dealer on CNBC the other day. He said the move makes no sense because they basically cost Chrysler nothing, they are buyers of the Chrysler product...so why tell them they can’t sell Chrysler’s anymore. I wondered if it was just “his side” of the story, but I don’t see how it profits Chrysler to close dealerships, if they are independently owned and their affiliation with Chrysler if contractual.
Yeah, what’s a green shoot? Never heard the term.
I believe the term “green shoot” was started by Bernanke:
http://www.google.com/hostednews/afp/article/ALeqM5h0_BVHNrjlYOoncy63c6fZFuXLag
Green shoot = reloading copper bullets. ;-P
Thanks!
Fire the ones selling the cars but keep the unskilled leeches who spend more time and effort to get out of doing work than actually building the cars-—good plan!
It cost the autos much money to build cars that no one is buying and keep dealerships going who are not selling these cars; since every state has laws concerning dealerships (all different). It costs the autos millions just to shut down one dealership outside of bankruptcy...as for the ‘leeches’, GM plants are going down for a period of six to 11 weeks beginning on May 31st. Chrysler is already shut down. Plenty of misery to go around.
This is untrue...who do you think pays for the cars until they are sold? Not the dealers.
Bingo.
Excess inventory sitting in the supply chain under “customer consignment”.
Please read so you have some understanding of the situation...dealers cost manufacturerers money and the companies must cut dealerships as a condition of the auto loans.
Dealer franchises dragging down GM, Chrysler recovery
By Ken Bensinger
Los Angeles Times
Posted: 04/13/2009 08:38:07 PM PDT
Updated: 04/14/2009 06:53:17 AM PDT
Car dealers — sponsors of Little League, fixtures of Main Street, vibrant symbols of the American entrepreneurial dream — could now prove the biggest threat to the future of the very industry they built.
For much of the past century, in exchange for selling Detroit’s new models and providing a public face to distant industrial giants, dealers were richly rewarded with a steady, lucrative business and received an honored seat in society.
Now, with the industry in crisis, the car dealer poses a major obstacle to the rehabilitation plans of the nation’s two most desperate carmakers, General Motors and Chrysler.
Economists, industry analysts and the automakers themselves agree that there are too many outlets for GM and Chrysler vehicles. Thinning dealer ranks — now nearly 10,000 combined for the two companies — is key to cutting the two automakers’ costs, ensuring that those dealers that do survive are more profitable and provide better service.
But while even some dealers concede there are too many car lots, few are willing to give up their franchises. Contracts with dealers, meanwhile, make it nearly impossible for automakers to simply put these independent business owners out of commission, the way they can lay off employees.
“We think the marketplace should determine which dealers stay in business,” said John McEleney, chairman of the national dealers association and owner of several GM, Toyota and
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Hyundai dealerships in Iowa.
The market is forcing some contraction. The National Automobile Dealers Association said 271 closed in the first quarter alone, victims of the brutal slump in car sales. But experts say attrition isn’t happening fast enough.
The possibility of bankruptcy looms for GM and Chrysler after President Barack Obama rejected their latest financing requests and sent them back to the negotiating table. Reducing billions of dollars in obligations to debt-holders and unions was singled out as the most immediate goal, and the administration has been working intensively with the automakers.
State franchise laws make it difficult and expensive for a carmaker to shut down dealers unless they fold on their own — or the carmaker goes into bankruptcy. With little leverage and the clock ticking, GM and Chrysler must find a way to navigate the complicated economics of the American car dealer.
“GM and Chrysler have this mandate to get rid of dealers, but the costs and complexity involved are mind-boggling,” said Randy Berlin, practice director at Urban Science, which tracks auto dealers. “Bankruptcy might be the only way.”
Automakers don’t own their dealerships. Instead, they grant franchises to businesses that buy vehicles at wholesale prices and mark them up for sale to the public, keeping the difference.
Manufacturers contribute more than cars. They provide financing for consumers to buy vehicles and for dealers to fill their lots. They also pay dealers to perform warranty service. Throw in sales of extended warranties, undercoat, used cars and parts, and being a car dealer can be profitable (excerpted).
I understand that. Excess union workers with excess total compensation (salary and benefits) cost the automakers a lot more money, but they are being spared much of the pain because they have more political clout through the UAW.
Obama, essentially, has ordered the firing of private sector employees.
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