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May 15, 2009 Hometowns brace for change as dealerships closePosted: 06:31 AM ET
Political Correspondent Richard Lui They are the fixtures in Everytown, USA. They are the family businesses that have survived generations of economic hardship, but now they are closing en masse.
Chrysler hopes to close about 1,100 small car dealerships.
GM and Chrysler are starting to hand out pink slips to dealerships around the country. Chrysler is asking a court to let it drop more than 1,000 Chrysler, Dodge and Jeep dealers - about a quarter of its network - as part of its bankruptcy restructuring. GM wants to close 42% of its 6,250 dealer locations, which employ hundreds of thousands of workers. They're spread out between urban centers and small towns. What’s different this time around is dealer owners will not get treated like the Oldsmobile dealerships that closed before. They received some $2 billion in compensation for shuttering their doors. This time it will be simple handshakes and goodbyes because of Chapter 11 procedures, which allow the automakers to bypass franchise laws. Chrysler and GM need to cut capacity though. Currently their dealer network can handle double the volume both carmakers currently have ready to sell. By reducing the number of dealers, they are reducing costs and the need to send cars to underperforming dealerships, some of which have not invested in their facilities in years because of lack of profits. Dealer owners aren’t taking this sitting down. Yesterday, more than 100 of them met with House and Senate members who are on the President’s auto task force. They want them to step in and slow the reduction, so communities can gradually absorb the jobs being cut. So how is this affecting your town? What does it mean to see the family businesses that have around for decades succumb to the bad times? Certainly it will mean the end of their sponsorships for little league teams, charities and churches and their leadership on local chambers of commerce. And bottom line, hundreds of thousands of jobs will be gone, and that’s not good for the country. Tell us what you think here, and we’ll get your comment on air on Morning Express. Posted by: Political Correspondent Richard Lui
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