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May 16, 2009

Chrysler having trouble driving off the lot

By Daryl Montgomery and Jack Kemp

Pity the poor former Chrysler dealers, abandoned by their company:

"I had to notify just around 50 people today that our business has been terminated, that they no longer have a job," said Kevin Ormes, owner of the dealership."

According to Reuters, there are 789 dealers who were terminated and

"Chrysler said the terminated dealers had 44,000 vehicles in the inventory and those dealers represent about 14 percent of Chrysler's annual sales."

That works out to around 55.75 vehicles left on each former dealer's lot. The dealers are stuck with inventory that may be hard to sell, and the company has loaded them up with excess cars.

"Over the past months, they've begged us (dealers) to buy vehicles..." That many cars in inventory probably amounts to around (my guesstimate) $1.5 million per dealer. If the former dealer could sell their vehicles at a deep discount to cut his own losses, he would still need his employees to prep them.
 
I'm no expert here, but I do definitely know that if I were looking to buy a car, I would have second thoughts about getting it from someone who let his mechanics go to find another job. Might as well go to a dealer who could do regular maintenance. I once bought a Plymouth many years ago and a mechanic had to put in a new battery before I could even drive it off of the lot.
 
And then there's this mess:


"Sal Risavalto of the New Jersey Gasoline Automotive Association has been fighting to get automakers like Chrysler to give independent repair shops codes needed to replace parts which they can't get now. He says Thursday's news will hurt consumers."

Let me translate this to you. If you somehow are able to buy a Chrysler car off the lot of a now-lost franchise, you can't get its electronics repaired in your immediate area because the dealer can't do it and the local repair shops can't. Cars today have many more electronic parts (essentially electromechanical single function mini computers) than years ago. So you have another good reason not to buy from these former dealers.
 
If all that weren't enough, Chrysler has reneged on its Lemon Law obligations. The Los Angeles Times writes:
"Since Chrysler filed for Chapter 11 bankruptcy protection April 30, financial claims incurred before the filing can be paid only if approved by the bankruptcy judge. Chrysler has not asked for permission to make payments on lemon law complaints -- and that is causing headaches for some of its customers. ...

The company said it had no plans at this point to ask the bankruptcy judge to approve payments to settle lemon law complaints."

Now that the United Auto Workers Union owns 55 percent of Chrysler stock, they probably think they can now just watch Fiat executives straighten this out while they stand (or sit) back and collect their assembly line work and/or retirement checks in a socialist utopia. But in the New York metropolitan area that WCBS covers, Utopia is just a Parkway in Queens. A Parkway with fewer Chrysler vehicles than before.
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