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
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
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
I beseech your help, and look forward to your reply. Thank you.
George C. Joseph
President & Owner
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.
(To reply by e-mail, replace the last letter of the alphabet in my
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.
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!
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.
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.
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
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
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
There is something very odd about pulling the franchise for these GM and
Chrysler dealerships. We're not being told the whole story.
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
"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
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
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
"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
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
While GM and Chrysler have the axe out to cut dealer numbers, Ford is
doing no such thing:
Ford Says They Won't Close Dealers, Reopens Plant to Build EcoBoost
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.
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.
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