Chrysler Pulls Out of Hundreds of Franchises
Friday, May 15, 2009
In 1915, at the dawn of the automobile era, Lewis Reed opened a Dodge dealership on Rockville Pike.
Yesterday his grandsons gathered startled employees together to tell them that the firm's 94-year run as a Chrysler-Dodge franchise was coming to an end. Chrysler was dumping them.
"It's not a good feeling," said Richard L. Gartner, one of Reed's grandsons, and the president of Reed Brothers Dodge.
Just after meeting to inform employees about 3 p.m. yesterday, he looked fazed, his face flushed.
"We have been with Chrysler for a very long time," he said, pausing. "We were kind of looking forward to a 100-year anniversary."
Chrysler slashed 789 of its 3,181 dealers yesterday, prompting emergency staff meetings in showrooms across the country, eliciting tears and feelings of betrayal toward the corporate partner they had long served. Most had been notified by overnight letters.
The culling touched Chrysler operations in more than a dozen showrooms around Washington, including Darcars Chrysler of Fairfax, Manassas Dodge, Colonial Dodge, Fitzgerald Auto Mall, Lake Forest Chrysler Jeep and Laurel Dodge.
More such scenes will play out again today, but on a much larger scale, as General Motors notifies 1,100 of its 6,000 dealers that they will be dropped, with another 1,000 to be cut later.
Chrysler and GM have said they must thin the ranks of their dealerships to improve business and their image.
Having too many competing outlets makes it difficult to keep prices up, industry analysts said. Worse, the resulting profit margins are so slim that it's difficult to provide the splashiest displays and hire the best salesmen. Toyota, they note, has fewer than half the dealerships that General Motors does.
The dealers generally agree that there are too many outlets. But they say that instead of being summarily cast off, the automakers should allow market forces and attrition to shrink their numbers. That, they acknowledge, is a slower process.
"Today's announcement by Chrysler that it is rejecting 789 of its Chrysler, Dodge and Jeep dealers marks a very sad day in retail automotive history," according to a statement for the National Auto Dealers Association. "These dealers and their more than 40,000 employees have done nothing but proudly represent the Chrysler brand through good times and bad, and today find themselves left behind."