Letter from a Dodge dealer

May 19, 2009 letter to the editor My name is George C. Joseph. I am the sole owner of Sunshine Dodge- Isuzu, a family owned and operated business in Melbourne, Florida. My
family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.
We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability.
I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.
On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.
Our facility was recently totally renovated at Chrysler's insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.
HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?
THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY
This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.
This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.
HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?
I beseech your help, and look forward to your reply. Thank you.
Sincerely,
George C. Joseph President & Owner Sunshine Dodge-Isuzu
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Pete E. Kruzer wrote:

Wow! In an earlier thread it was stated (speculated?) by Mopar Man that the vehicles and parts inventory would be redistributed to other dealers. I further speculated that they would have to be purchased back and *then* distributed, but the above letter says the dealer will have to keep them (finish paying for them) and dispose of them on their own.
A sad story for the owner and the nation. Too bad 50% of our citizens couldn't care less, and feel fine about what's going on.
--
Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
In article

A very sad situation, one which makes me very negative towards Chrysler. They're being very heavy handed, there are better ways to do this.
I heard a similar one on a trip to Oregon. A smaller Oregon community has both a Chrysler and a Subaru/Jeep dealer. The Chrysler dealer from the 1930s that is doing well is being shut down and the Subaru/Jeep dealer is receiving that dealerships license.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Josh S wrote:

Chrysler has no choice. Almost the entire deal is dictated by the White House. Take a look at which dealers closed and which remain open and then tell me theres no political bias and control from the WH!
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
miles wrote:

Why? Because stealership owners are primarily Republican?
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
News wrote:

They weren't at all. Some Democrat, some Republican. But the ones closed were almost entirely NOT Obama supporters.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
miles wrote:

Cite? Or pulling this out of your ass?
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

It was proven by countless sources that the percentage of republican closed dealers was within a point or two of the overall number of dealers that are republican owned. It's just one of those stories being circulated by the same ones who still think Obama is Muslim and that "Mission Accomplished" was for real.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
CopperTop wrote:

Who said anything about Republican or Democrat owned? I said the ones closed were mostly NOT Obama supporters. Total contributions to Obamas campaign from closed dealers was $200. You instantly assume that means they were republican. Hillary and McCain were the benefactors of contributions from the closed dealers NOT Obama.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Sat, 30 May 2009 07:59:19 -0700 (PDT), "Pete E. Kruzer"

The socialization of the US has begun. Welcome to the United Socialist States of America. They elected him, now we all suffer.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
QX wrote:

And what makes you think this is not a Chrysco decision?
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
I get the impression that Chrysler and GM are both doing this to reduce dealer competition which will increase price for the consumer and profit for the companies?
Steve
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Steve Stone wrote:

More profit for dealers (on a per-car basis) does not equate with more car sales (for the manufacturer).
This is what puzzles me.
Every dealership is like a huge, permanent, no-cost advertizement for the manufacturer.
Take that dealership away, and you reduce the visability of your brand. It's like taking a billboard down. Or worst, replacing it with that of a competitor.
If dealerships are hurting financially, moreso than anyone else in any other retail sector is hurting for the past year, then it's not making the news. You would think that Chrysler and GM would *NOT* have to resort to pulling franchises to reduce the number of dealers (ie natural market forces should do that by itself).
When you look at franchises that have closed in other market sectors (Home Depot, Starbucks, Krispy Creme), they have closed for "performance" reasons. Probably not because they take business away from other nearby stores of the same brand.
Home depot closed 15 stores between May and June 2008 (first time it ever closed a store) yet at the same time it was planning on *55 new stores* during 2009 (but that seems to have been reduced to about 12 stores instead).
There is something very odd about pulling the franchise for these GM and Chrysler dealerships. We're not being told the whole story.
------------------------ http://www.reuters.com/article/domesticNews/idUSTRE49069R20081001
U.S. dealership closures to increase into '09: study Wed Oct 1, 2008 5:54pm EDT
DETROIT (Reuters) - The number of U.S. car dealerships closing is expected to increase into 2009 with as many as 3,800 dealerships at risk of closure because of dwindling sales and tighter credit, according to a newly released study by Grant Thornton LLP on Wednesday.
With U.S. light vehicle sales predicted to drop to the 13.7-million-unit range in 2009, the study said that about 18 percent of the total number of U.S. car dealerships would need to close to maintain sales per dealer at last year's level of about 750 units.
"An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines," said Paul Melville, a partner with Grant Thornton LLP.
"In addition, the domestic automakers who badly need retail consolidation are not spending much of their scarce capital on the problem because the economy is doing it for them," he said. --------------------------
So here we are being told that there will be dealership closures during 2009, but not because their franchises are going to be pulled by the manufacturers. The closures will be because of "the economy is doing it for them".
------------------------- Analysts have said that U.S. carmakers need to cut U.S. dealerships -- particularly in crowded city markets -- in order to drive more sales through remaining stores and free up funds for advertising and new investment.
GM cut some 260 affiliated dealers last year, which took its U.S. dealer count to about 6,750 outlets at the start of 2008.
Unrealistically high price demands by sellers has slowed voluntary consolidation, however, according to Grant Thornton.
The deal-making environment is expected to improve in the early part of 2009, the study said
"Prices will come down as the weak market continues to erode franchise values, and as liquidity returns, we see more consolidation deals proceeding," Melville said.
He added that if franchise values were to fall 20 percent, it could stimulate mergers and acquisitions activity. ----------------------------
So in spite of having too many dealers (which we are speculating would lead to too much competition and price erosion) the opposite was happening:
"Unrealistically high price demands by sellers has ..."
Unrealistically high price demands by sellers?
Does that mean despite the perception of too many dealers, that instead of price reductions we have instead price increases for the vehicles in question?
Strange.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
MoPar Man wrote:

Ok, never mind.
They were talking about the valuations of the dealerships themselves, not the retail prices of the cars they're selling.
They were clearly expecting back in October last year that weak dealerships would be bought by stronger ones, but that it wasn't happening yet because the weak dealerships were overestimating their value.
While GM and Chrysler have the axe out to cut dealer numbers, Ford is doing no such thing:
----------------------- http://www.trucktrend.com/features/news/2009/163_news090519_ford_wont_close_dealers_opens_plants_to_build_ecoboost_engines/index.html
Ford Says They Won't Close Dealers, Reopens Plant to Build EcoBoost Engines May 19, 2009 By Scott Evans
After a week of news revolving around dealer closures from Chrysler and GM, Ford is balancing things out this week with some good news. Most importantly, the Blue Oval has announced it will not be cutting dealers the way its hometown rivals have and is instead reopening its Cleveland Engine Plant No.1 to build EcoBoost engines.
According to Ford's director of North American sales, Jim Farley, Ford has been working to consolidate its dealers rather than close them and has already reduced its network by 700 dealers since 2005. Farley said that while Ford plans more consolidations, the numbers won't be nearly as drastic as those proposed by Chrysler and GM. Ford currently has about 3700 dealers in the U.S.
"It seems very abrupt and unplanned," Farley said of Chrysler's announcement last week that it would cut nearly 800 dealers by June 9. "You don't orphan 4 million customers overnight without some fallout. It really depends on how GM and Chrysler handle these orphan owners. If they don't give them a lot of attention, it will result in consumers going to other brands."
Ford is hoping that some of those orphaned customers and other potential Chrysler and GM customers will migrate to Ford showrooms instead and sees the reduction in the number of competitor's dealerships as advantages to its own dealers. On the other hand, Farley said that Ford is concerned about the big price cuts and incentives that closing Chrysler and GM dealers could begin offering in the near future in order to clear their lots of an estimated 44,000 unsold vehicles. He said that Ford will not try to match their sales and incentives.
"We are very concerned how they are going to handle those 44,000 units," he said. "It's like a liquidation sale now, and the biggest issue is whether they will cut prices to move the inventory." -------------------------------
Chrysler and GM should have allowed the dealerships to be closed to continue to sell their current inventory of new cars until exhausted, instead of unleashing them on the public at fire-sale prices.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
MoPar Man wrote:

I'm still waiting to see those fire sale prices!
I'd take a Jeep cheap.
CB
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Cheeky Bastard wrote:

Trade in a junker and get your $4500 discount!
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
News wrote:

Did that bill pass today?
If so I have a 89 K5 that can go.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Cheeky Bastard wrote:

Theres been some good fire sales but not just at the closing dealerships. I just bought a new 2008 Caliber SRT4 for $7000 off MSRP sticker. This was from a surviving dealer who bought up inventory from one that closed.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Cheeky Bastard wrote:

That would be the Jeep Fiasco Model?
--
Civis Romanus Sum

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Chrysler prices have gone up recently; now that New Chrysler is on the way.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Motorsforum.com is a website by car enthusiasts for car enthusiasts. It is not affiliated with any of the car or spare part manufacturers or car dealers discussed here. All logos and trade names are the property of their respective owners.