Car Dealers Reeling From Forced Closures

Many To-Be-Shuttered Chrysler Dealers Offering Deep Discounts To Avoid Bankruptcy

(CBS)  Greg Signore, who owns Elm Dodge in Kearny, N.J., says he feels backed into a corner. And he's angry.

"We're the road kill in all of this," Signore said.

He's one of nearly 800 Chrysler dealers nationwide given notice they will be closed. On top of that bad news, Chrysler ordered Signore to clear out his show room by June 9, reports CBS News correspondent Michelle Miller.

"After 60 years, they don't give me the decency to have a longer period of time to get rid of my inventory," Signore said.

So, he's slashing prices on all new cars. Take this 2009 Dodge Grand Caravan. It retails at just above $33,000, slightly more than what he paid for it. To get it off the lot, he'll take $25,000.

"You will lose?" Miller asked.

"I will lose $7,000 on the car," Signore said.

Today, sensing blood, some customers were pushing for even more.

But for Chrysler dealers like this one, this weekend is more than just a gimmick or a three-day fire sale. It's about moving cars or possibly going bankrupt.

Signore has 20 cars to sell, an investment of nearly half a million dollars. Over the last year, he's averaged five sales a month. Since getting the "notice to close" last week, he's sold two cars.

"I'm angry," Signore said. "This is my asset - they're stealing it away from me."

Signore said he wouldn't have this many cars if he hadn't given in to Chrysler's pleas to buy more cars than usual as it struggled to save itself.

"You had to take more cars to qualify for incentives," Signore said.

Chrysler has offered to help shuttered franchises with their inventories, but half the dealers are going to court on June 3 to halt the forced sell-off.

"This is my retirement ripped right out of my hands," Signore said.

But that's unlikely to save Signore's six-decade old dealership, a legacy passed to him from his father. He'll now have to depend on used car sales to stay open.

[creeper00]

So is it true that the shuttered Chrysler dealers were heavy Republican contributors in the last election?

If this article is true it's a new low, even for Barack Obama.

http://directorblue.blogspot.com/2009/05/red-alert-did-campaign-contributions.html

[jonesjep]

They should ask some of these car dealers who they voted for??? I am sure most followed their piper the UAW who has been leading their entire industry over this cliff for 30 years.

It is a terrible shame but the question needs to be asked of all of these car industry workers....Where is your Hope and Change?

[tiredofthebs]

Oh how my is NOT BREAKING. Like anybody else, I feel for the families effected by this economically, but the auto industry has had it comin' for a LONG TIME. At some point and time EVERYONE has been takin' in a car deal if you dealt with a dealership. Now that outrageous profits have been replaced with overflowing showrooms, it's hard to be sympathetic.

[neturalist]

Yes, there is a problem. And the problem is economic. People lost their jobs do to liberals BS. Company managers went to China & elswere to make bigger profit. But, also let me ask, you car-dealers, how come you did not drop interest rate on your cars 10 years ago? You made a lot on cars and you charged 12-15% interest on borroewed money, so you must made a good profit! And today you cry. - Cry Baby!

Steve Tamas

[Ichabod09]

Sure money would be lost ,but the consumer and market would be on solid footing ,at affordable wages and prices and all of these trillion dollar programs would not be our only option.
Posted by mars7578 at 12:00 PM : May 25, 2009

Great analysis with one problem- political cowardice due to public outrage from perceived property devaluation. Again, a great idea but simply the public won't stand for the air coming out of their financial love toy.

[mars7578]

The auto industry and this administration need to realize the cost effect the market had on price.It is well agreed that everything went up during this paper economic boon but wages.Affordability was base on credit .Now that the value of this paper has greatly declined,the affordability has declined.This means that the cars prices need to decline.The administation in an effort to stabilize the market ,did not allow the market to devaluate to actual value.Therefore the market price of many items including debt did not fall as they should.The only place this took a significant effact was in housing ,although the administation is putting massive amount of money to stop the decline in value.The problem with this solution is that the problem of pricing and a lot of uncollaterized personal debt.The alternative would be to let the prices drop and reissue loans at current value and then work with the financial institutions.Sure money would be lost ,but the consumer and market would be on solid footing ,at affordable wages and prices and all of these trillion dollar programs would not be our only option.

[pollroller1]

Well, I for one LIKE my GM car. It is now 6 years old and I have not had any problems. The wife has a Honda. Her car is nice, but no better than mine. Chrysler? Not too sure about them.

[Ichabod09]

"After 60 years, they don't give me the decency to have a longer period of time to get rid of my inventory," Signore said."
______________________________________________________________________

Car dealers crying about lack of decency is somewhat akin to the madam of a bordello decrying the morality of her johns.

[golfered2]

GM, Ford and Chrysler need 4 times the number of dealers that Toyota or the rest of the foreign carmakers have because the UAW manufactured cars have at least 5 times the number of repairs as the foreign cars have. The engineering at Ford Chrysler or GM are as good as the foreign guys but the manufacturing and assembyly that the UAW does is total crap!!!!!!

[rational_1]

Welcome to the wonderful world of Government Motors and the Obamanomics car plan to save America.
Posted by platteman at 4:55 PM : May 24, 2009

Wish this plan had been implemented BEFORE we sunk billions of my money and yours into these failures. Great, just great - like they couldn't have gone bankrupt half a year ago. I'd like Obama to explain how much money he cost us with this debacle.

[Newster1]

"After 60 years, they don't give me the decency to have a longer period of time to get rid of my inventory," Signore said."

You expect decency from corporate America?? like people honestly expect products, food and things to REALLY be safe?? made by companies whose ONLY interest in the stock holders and quarterly profits??

"So, he's slashing prices on all new cars. Take this 2009 Dodge Grand Caravan. It retails at just above $33,000, slightly more than what he paid for it. To get it off the lot, he'll take $25,000."

Good gawd these cars have gotten insane, $33,000 for a freaking CAR??? even at $25,000 it' still a huge ripoff!
TOO bad dealers, you have been selling over priced KRAP that falls apart, and the whole industry grew way to big- based solely on brainwashing the idiots out there that they need a new $25,000 machine every 5 years or so to keep up with the newest STYLES! hello, but $4/ gal gas, $500/mo full coverage insurance, $15% interest on a piece of krap that rusts trhu, needs recalls or falls apart and devalues before its even paid for is the problem.

The original Model T Ford car got up to 21 miles per gallon (mpg). One hundred years later, the average passenger car in America still only gets 23 mpg, EXPLAIN THAT!

Assembly-line production methods introduced by Henry Ford in 1913 enabled the price of this five-seat touring car to drop from $850 in 1908 ($19,000 in 2008) to $300 in 1925. (What cost $300 in 1925 would cost $3655.37 in 2008. )

EXPLAIN THAT, a car in 1925 selling new for $300 is with inflation a $3,655 car in TODAY's money! EXPLAIN how come it's 500% MORE

[smoknmirrors]

Sounds like the worst case scenario is that new car dealers will have to become used car dealers. With on site financing available (buy here, pay here) used car sales isn't exactly chopped liver. I know that you shouldn't use this word in relation to the automobile industry, but in this challenge, as in any other, when you are confronted with a lemon, make lemonade! And sell it.

[number1GI]

To rhs648 .... I agree with you there too

[rhs648]

Welcome to the wonderful world of Government Motors and the Obamanomics car plan to save America.
Posted by platteman

Sounds like a formula for failure. It is so reassuring that the government feels it can do a better job running the automobile industry than GM or Chrysler. The government has been steering GM and Chrysler into bankruptcy for months. The idea that GM and Chrysler executrives could avoid babkruptcy is a sham. No matter what plan they devised, the government would settle only for bankruptcy. This sounds too much like something Hugo Chavez would do.

[platteman]

Welcome to the wonderful world of Government Motors and the Obamanomics car plan to save America.

[swin5]

There is an issue that people are missing.

In the first auto age (pre-WWII), cars were sold locally, driven locally, and made by a plethora of car companies offering wooden frames, 12 cylinder engines, etc. etc. The Depression began to clean things out via mergers and bankruptcies and after the war you were left with essentially only 3 major auto manufacturers. Then the second auto age began, with suburban growth, an auto dependent lifestyle, and travel at will anywhere across the country.

And why not? If your buggy broke down anywhere in the country, service was available, parts were available, and usually by the end of the day you were on your way again.

Say what you want about the big 3, or the big 2 counting Ford and GM. You can travel the country and not worry about a sudden repair. After I retired I've driven across the country to some very remote places in Nevada, Utah, Montana, and Wyoming. I wouldn't be caught dead in a KIA, or even a Toyota. Break down and that's it. No dealers, no repair centers, no parts, nothing.

All these rice grinder manufacturers serve the yuppy class in the big urban areas. Only Ford, GM, and to a lesser degree Chrysler had a coast to coast network of parts and service that allowed you to travel ANYWHERE with confidence. Now that network is being disassembled.

I will say this again and again. When you have 40 brands of cars and none made both in America and by American owned companies, the prices will go way up, the quality will go way down, and the service, where and if it is available, will stink. Travel by car will become much more difficult and inconvenient and risky because we allowed a national coast to coast network of dealers to disappear.

If I'm wrong, I would like someone who lives in the west to write in and tell me so. But I've traveled through Hanksville, Utah and Ely, Nevada, and Cody, Wyoming and I sure didn't see any Toyota or Kia or Subaru or Nissan dealers anywhere around but I did see GM, Ford, and Chrysler.

[cs4466]

Oh yea they're reeling all right. Two of these dealers are within 50 miles of my home. Both are on the "closing" list that Chrysler published. I went to both on Friday. Both were closing early, due to the holiday. Neither were open on Saturday, Sunday or Monday. One had a salesman that drove around a Viper (91k+ car) like it was his personal property (it wasn't, and he parked it on the showroom floor when he was at work). Neither dealer had any sales going on, at least none that brough the price of the vehicle more than 1% below the MSRP. And if you needed to finance any amount, the discounts didn't apply

Oh yea, these guys are hurting all right. LOL!!!

[CB_Brooklyn]

BBC NEWS VIDEO:
The Air Powered Car
http://video.google.com/videoplay?docid=2228669770213573581

REUTERS NEWS VIDEO:
The Water Powered Car
http://www.youtube.com/watch?v=CrxfMz2eDME


The reality of free energy goes mainstream. On April 19, 2009 CBS' 60 Minutes broadcasted a segment on Cold Fusion. Not only do they speak optimistically, they also state the Pentagon verified the free energy claims! The MUST SEE CBS video and article are linked below:

Cold Fusion Is Hot Again
60 Minutes: Once Considered Junk Science, Cold Fusion Gets A Second Look By Researchers
http://www.cbsnews.com/stories/2009/04/17/60minutes/main4952167.shtml

[xyz926]

THE ROOT CAUSE OF AMERICAN CAR COMPANIES' TROUBLES HAS BEEN THE DEALERSHIP. I AM CERTAIN THAT NEARLY EVERY AMERICAN CAN RELATE STORIES OF LYING, CHEATING AND INEPTITUDE. IF GM, FORD AND CHRYSLER HAD INSISTED ON MINIMUM STANDARDS OF ETHICS AND COMPETANCE, THEN AMERICANS WOULD HAVE SWITCHED TO THE JAPANESE IN MUCH LOWER NUMBERS. THE RELIABILITY AND SAFETY ISSUES HAD LARGELY BEEN OVERCOME BY THE MIN '90'S. SINCE THAT TIME, AND PRIOR TO THAT TIME, IT WAS THEIR DEALER THAT GOT THEM THE BAD NAME. YES, THERE ARE ALSO ANY NUMBER OF ANNECDOTES AS TO THE AUTO MANUFACTURERS' OWN EMPLOYEES GETTING THEM IN TROUBLE AND THAT WAS ALSO A PROBLEM THAT THE SUIT AND TIE CROWD WAS TOO LAZY TO ADDRESS. BUT MAINLY, IT WAS THE DEALER THAT DID IT.

[brianbwb-2009]

"... If your employer tells you on Thursday that your job will be terminated on Friday, is that enough notice to satisfy you?" Posted by rhs648

Nope, but If I can plainly see that my employer's business practices will inevitably lead to failure, I don't wait for such notice.

In the case of Chrysler, we have known for years that their business model was outdated, and it was only a matter of time. In the 70s, when auto companies were laying off their labor, it is only logical to have asked, "If auto labor is laid off, then steel, then other support services, who is then going to buy the products they sell?"

We in Detroit asked these questions, but the car makers never answered, seems like they figured that the rich would buy enough to keep them afloat, they canned cheap, efficient models for the overpriced tanks they sold.

Remember the Bricklin? Hand made, sold for $7k. The DeLorean? They framed John D (who gave us the mustang, one of the US' finest cars) so his business model couldn't compete.

This day was foreseen thirty years ago, and those who even accurately predicted the time were ignored. If thirty years isn't enough time to prepare, then you have a problem, and it isn't the auto makers, or the president, or the consumer.