Chrysler and GM Send "Dear Dealer" Letters

Chrysler and GM are downsizing, and it’s not going to be pretty—but certainly better than going out of business. Chrysler is up first. The company has 3,200 dealerships around the country, and (according to a motion filed with the U.S. Bankruptcy Court) it wants to eliminate a quarter of them (a total of 789) by early next month.

Chrysler says that 50 percent of its dealers account for 90 percent of its sales, and the rest have volumes too low to be viable. The unlucky 789 were told of their fate in letters delivered by UPS Thursday morning. Some of them, such as Don Drennen Chrysler Jeep in Birmingham, Alabama, had been in business for decades.

Connecticut offers an interesting microcosm. There are more than 30 Chrysler dealers in the state, and seven of them—with prosaic names like Bob’s Dodge, Wilson and Sons and Amaral Motors (tiny, but selling Chryslers since 1936)—are to lose their franchises.

Many of the survivors are in wealthy Fairfield County, including the Scap Automotive Group (which has separate Dodge and Chrysler/Jeep dealerships, as well as Saturn and Buick). At Scap Dodge, manager Ernie Ursini is breaking out the champagne. “We are happy and elated, of course,” he said. “But we weren’t extraordinarily surprised, because we are a strong dealership.”

Scap Dodge sells an average of 15 new cars a month, and 10 used ones. Over at the Chrysler/Jeep store, the numbers are higher: 45 new and eight used. A bestseller for Scap Dodge is the 2009 Caravan minivan. “People are buying the family vehicles,” Ursini said. “The small cars were hot when gas was $4.50 a gallon, but now we’re moving trucks and small SUVs. The large SUVs are still not selling.” He’d like to see the company build the ENVI battery vehicles it has shown in prototype form, and if Dodge could produce a subcompact four-door sedan running on hydrogen, he’d be a happy man.

Was Ursini worried that Scap would be on the list? “A little,” he said. “You just never know what Chrysler will do.” Or will do in the future. David Cadden, professor of management at Quinnipiac University, told the Connecticut Post that more cuts are ahead for the state’s dealers. “It keeps getting worse and worse,” he said. “If GM goes, they could be dumping 42 percent of their dealerships.”

Scap Dodge photo