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May 15, 2009

Hometowns brace for change as dealerships close

Posted: 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.
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.

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Lora   May 15th, 2009 6:38 am ET

Is there a list available of all potentially closings of these dealerships?

SA Haydock   May 15th, 2009 6:39 am ET

This is another example of government interventions that do not reflect a free economy. By closing these dealerships they are controlling who has access to what cars in which areas instead of the market determining if a product is needed or not.

Will the same thing happen with bank outlets, drugstores, health care clinics? Government determining access not the market.

Darrell   May 15th, 2009 6:40 am ET

Isn't it ironic that the dealership not in immediate danger of closing is the one who's cars were often mocked as Fixed Or Repaired Daily?

Sybel   May 15th, 2009 6:46 am ET

Car dealership closings will have a ripple effect on all the related business that depend on them. Wake up America, industrial Detroit's suffering causes pain around the globe. Every American who drives a foreign car should be ashamed to leave their driveway! Wake up Mr. President and staff – Detroit needed the same bailout that Wall Street and the banks got. I didn't hear you and Congress giving the bankers on Wall Street the bankruptcy ultimatem you forced down Detroit's throat. The auto industry afforded America the opportunities for enriching life that never would have happened without these jobs. No-one in Michigan has a secure job, not even doctors. Do you think things are bad here, just wait – no matter where you are or what you do – some segment of your life has depended on the Detroit auto industry and remember, profits from foreign cars built in America still go back home overseas.

Ray   May 15th, 2009 7:17 am ET

I feel for the small town dealerships, but unfortunatly there are way to many dealerships as it is, Most individulas who consider buying a car go to bigger dealeships in bigger cities for better discounts and more cars to choose from.

John   May 15th, 2009 7:20 am ET

Richard, are you kidding? Local tball teams may be affected. Who cares. That's supposed to be journalism, I don't think so.

emma   May 15th, 2009 7:37 am ET

I can't believe more people are losing jobs, I tought the economy was supposed to get better with all the stimulus money and prommises. My husband is a truck driver and it has been a nightmare there are no loads to drive and if therre are some they are .70 per mile, Are people allowed to live? Or we all have to go homeles?

Leslie Holloway-Steiner   May 15th, 2009 7:54 am ET

Coming from the "Car Business" after several years, I have said that the automotive industry from the top need to take a look at the business practices that happens in the local dealerships. They are still operating like they did in the 70's. THINGS HAVE CHANGED. The automotive dealerships need to get in the 21st century. I wish I could spend about an hour pitching an idea to the top folks in charge. It's very simple, streamline your advertising to AutoTrader.com as a single source, get rid of the idea that you will employ 40 and 50 year olds that make commission only, get some young people and pay them a flat base salary to run a internet friendly dealership. Technology is where the people arein 2009. They are on their phones or comuters.....period. People don't have time to play games and waste time at an automotive dealership. The dealerships that will survive will be the ones that bring their business into the "NOW" technology and restructure the way they do business.

sleepy   May 15th, 2009 8:22 am ET

Is this doomsday?

Justin   May 15th, 2009 8:24 am ET

Why is it that many people said that they wanted the government to let the auto companies fail, but now when they do, they complain. People need to understand how deep the auto companies reach into our economy with dealerships, manufacturing plants, suppliers, etc. This goes beyond CEOs to hard working Americans across the country fighting to survive this recession.

sherie   May 15th, 2009 8:30 am ET

I don't know what reality in America Obama thinks he's living in; but it certainly isn't the America I'm living in. His credit card reform protects no one. I've never missed a payment, never been late on a payment, never charged two months consecutively, always paid more then the min. had a 9.99 interest rate and watched them raise it to 29.9, tripling my payment. How does that help the credit card companys. They made it so I can't even afford my payment! No where in his plan does it say; " If your in a situation such as mind that consumer should be protected. They were responsible with their credit, they shouldn't be penalized. A month ago Obama and Chysler promised; " No plant closings, no one would lose their jobs". Before the election he promised to help the housing industry. How has he helped? Gave more money to the rich, to pocket. Millions have lost their jobs and their homes since November2008.Obama is a fraud. Plain and simple con man.

mose   May 15th, 2009 8:31 am ET

It is a bad thing that GM has to close dealerships, however, other car manufactures will step in. Many people will be able to go to new dealerships as thier business exapands. This is not the end of the road for all of these people.

snowmangr   May 15th, 2009 8:31 am ET

The car companies are going to lose business because people won't be willing to go twice as far to buy they're next car as they did before.

kb   May 15th, 2009 8:31 am ET

"they are controlling who has access to what cars in what areas.....will the same things happen to banks, drugstores, etc...."
Yes, its already happening with drugstores.
What used to be known as the local corner drugstore has been affected... 3 months worth of a perscriptions that used to be covered on my insurance by any pharmacy, now can only be filled at a chain i.e walmart..walgreens etc. in order to save to money you almost have to go where the ins. dictates.....so there goes the business at the hometown pharmacies and where you are almost known by name, they are forcing the market's hand.
It is sad...that only a mere 10 years ago how different America used to be and how bad Corporate America is not onyl running our lives but also ruining them town by town family by family. Our freedom of choice is limited more and more day by day.

Hayden   May 15th, 2009 8:32 am ET

What ever happened to Obama promising to create thousands of jobs? I see more people losing them these days than any being created. I have had three family members lose their jobs of fifteen years or more in the past three weeks, and in industries that are not even related to the auto industry. If this many people are being affected in so many varieties of industries, then I suggest the President make it a top priority to stop the auto industry from going under or else the majority of the population will be without a job! How can we create jobs after that if we have no revenue coming in to start new projects and businesses?

Don   May 15th, 2009 8:35 am ET

The one thing that will help out our economy is immigration reform. We have over 12 million people who are out of status and they are forbidden to get driver licenses and open up bank accounts AND TO BUY CARS since they don't have proper ID.

It's time right now to allow these people to obtain their legal status since most of them have been living in the USA for over 10 years, in some cases over 20 years. They are the answer to our economic despair. They have money that they can't put into banks or use to buy cars or houses. When will America wake up?

If about 8 million of these people pay for their driver's license at $35 each, that's $280 Million dollars a year brought into our economy. They also will be required to get auto insurance at about $500 per year (which I am using as a low conservative figure). That's another $4 Billion Dollars each year. And, they are going to need cars. Let them buy our cars and buy our houses. Doesn't this make sense? Who else will buy cars and houses these day?

Furthermore, they must pay USCIS (immigration) Filing Fees and Penalties of over $1,500 per person. That's another $12 Billion Dollars infused into our economy.

With the trickle down effect of these people paying all of these immigration fees and driver's license and auto insurance, PLUS the fact that they will buy cars and houses, they will bring more than $100 Billion Dollars into our economy. Don't we need this money? Are we missing something? They will help in stopping this enormous unemployment in the auto and housing industry. Just remember that these people are not allowed to buy cars or houses because that's what our wonderful immigration laws are doing for our poor and desperate and bankrupt economy.

The time is now for immigration reform and permit these people to legalize their status. The ones that are extreme criminals, they will be barred.

virgil shepherd   May 15th, 2009 8:38 am ET

i can believe everything thats going on with automakers,someone needs to tell the people the truth.it seems like the american people have to keep up with everyone else.if something new comes out on a car they get rid of their old one even if there is nothing wrong with that old car they have.ive seen people get rid of thier car that has only 10,000 miles on it just because the newer model has something new.the automakers fed off that.they got greedy and started making cars like crazy.they grew and grew and got greedy and got to big for their britches.now they get stimulus packages to try and help save them when things get rough.thats just like giving them more money for the cars we already payed for.its thier own fault.they need to get rid of the machines and robots and start using the people and quit pumping out cars that arent needed.downsize.look at the chrysler building,,,get real.look at the size of it.they dont need such a huge building.as far as im concerned the greedy automakers made their bed now make them sleep in it.lets not give them money.they need to downsize and quit being greedy.what do they use the chrysler building for?people working behind a desk?behind a computer?they can do that from home.let them suffer and clean up their own mess.greedy people.

Jimmy   May 15th, 2009 8:47 am ET

Whats sad about Gm closing and layoffs, its always the blue collar workers whos going to pay for the over paid ceo and other managers who will keep there jobs .

kb   May 15th, 2009 8:54 am ET

who pays for financial errors made by autodealers ships that close?

we bought a truck and left all the paperwork up to the dealer to take care of as far as taxes and license etc.. ..come to find out they paid the wrong taxes to the state and county and now we are being billed for the dealership error ...plus interest for the last 3 years! We have no one to get the money from since the dealship had to close! They close the doors and are not held accountable for any wrongs and yet take more money our of our pockets. Who walked away with the money that was originally given to the dealership by the financial institution for these fees?

Chuck   May 15th, 2009 9:03 am ET

It's a "supply & demand" thing! If you cut the supply by 25%, and the demand stays steady or even goes up, then the amount people pay goes up as well....since there are less available. I think women use this "trick" in Alaska (smile).

Jim   May 15th, 2009 9:29 am ET

Wow not good news to hear. But these dealers are the ones servicing the warranty. Hmm I see long waits at existing dealers for warranty repairs. Ford is looking better and better. It seems Chrysler is getting good not paying loans back. You might check my thoughts but I think this happened before with them.

Everett Tsosie   May 15th, 2009 10:54 am ET

Car companies are making a big mistake about closing the dealerships. That directly effects the income to the sales. What they should do is break off the dealerships and allowing them to do business on their own so that can sell any car they want. This will keep portals to the consumers and at the same time remove contract obligations to the dealerships.

Jesse Martinez   May 15th, 2009 11:16 am ET

One of the main things that some of the domestic automakers have failed to do was to have better quality controls over their products; look at the numerous recalls that they have had over the years in comparison to the Japanese.

ronvan   May 17th, 2009 9:10 am ET

Just another day! I feel sorry for all those that will loose their jobs. However, The heck with the CEO's & upper management at GM & Chrysler. THEY are the ones responsible for this one! Ford took some of their monies and invested in R&D. The other 2 didn't look forward and just kept charging $$$ & building 18-20MPG guzzlers.
And come on folks they were not that good a product for the $$$!
In 03, looking for a new mini van I could not find anything under 35K, with options I wanted. I wound up buying a Kia Sedona, with more options than I needed for 23K. So far I am more than happy with it.
Other than normal maintenance, it runs like a swiss clock. Still have 3yrs & 25K left on warranty. Have travelled from E. to W. – N. to S. & am still getting 25MPG!

Linda   May 18th, 2009 7:47 am ET

Lora

Here's a site that may be of help

http://www.huffingtonpost.com/2009/05/15/gm-dealerships-closing-se_n_204031.html

It's only a few since GM doesn't want to disclose them.

HTH

world traveler   May 18th, 2009 10:29 am ET

i would like to see all of them close, it is about time for new blood to take over, a company that produces a better product.

Let them burn !!!   May 18th, 2009 10:51 pm ET

The customer is your bread and butter. If you are a bank, car maker, dealership (let me talk to the manager) you have made your own bed now sleep in it. The oil companies, banks, car related companies have sucked the American people dry. There was no cheaper gas, no better mpg cars, no better loans and the same old song and dance at the car dealerships. Let's not throw good money at BAD business practice. Let them go under and watch the new business models take root and flourish. These days the Unions (jobs bank), boards and CEOs are a joke. Lets give the younger generation a chance to build something new !!!

california bowtie employee 95340   May 19th, 2009 12:31 pm ET

The dealership i work for doesen't sponsor little league baseball. In fact they have a negative affect on our comunity. By hiring and firing people. Hire someone for minumum wage get a few years experiance and when they ask for a pay raise they get fired. Same goes for there sales staff hire people new to the car sales game and manipulate them by paying them the bare minumum % of the profit on that car. And by getting the same newbie car salesman to sell cars to his friends and family. Experianced car sales people can earn up to 45% of the profits on each sale. Then after the sales person get a few months in they get fired. Then it starts all over again with a new batch (3 to 10 people) of newbie sales people And as far as there service dept. Same song hire people for as cheap as you can even if they don't have enough experiance as the other guy thats been working for them for 10 years if this inexepianced cheap labor will work for less the guy with 10 years under his belt will get axed. So the next time you take your gm vehicle in for service guess who will work on it ? Does this compromise the qaulity of work and your familys SAFETY ? in california 95340

Billy Wheeler   May 21st, 2009 4:22 pm ET

I watched this story, mainly in regard to the Chrysler/Jeep dealerships. While a friend recently took advantage of some deep discounts at a dealership in the Atlanta area, I wonder what OTHER impact these dealership closures are going to have on the rest of the auto market.

My question, is how are all the discounts going to affect the current auto values and resale/trade values of other vehicles. Is this going to drive the current values down accross the market? Great for BUYERS... but not necessarily for anyone wanting to trade or sell their vehicle.

connie   May 29th, 2009 5:17 am ET

The little girl and her mom that went to Disney went for her birthday she had just had new baby . She ccame from broken home so the mom wanted to do something special for this little girl and made up an elaborate story to spend some time with her daughter so she would not fe4eel left out . why doesen't some one talk to the little girl.why won't somebody see that it was her birthday and thats it

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