news-record.com

Greensboro’s City Motors and Graham’s Stearns Chrysler-Jeep are among the several Chrysler dealers across North Carolina that automaker Chrysler wants to close in June.

The cuts are part of Chrysler’s plan to eliminate about 800 of its 3,200 U.S. dealerships by early next month. The company, in a bankruptcy court filing Thursday, said that the network is antiquated and has too many dealers competing with each other.

More dealer cuts could be coming. General Motors could announce as early as today its plan to cut more than 2,000 from its network of 6,200 dealers.

Chrysler dealers were stunned by the news.

“It’s shocking … nothing like this has ever happened,” said Jeff Stearns, president of Stearns Chrysler-Jeep.

“We don’t really know what’s going to happen,” said Mike Cranford, general manager of City Motors, a Jeep dealer. “It’s business as usual.”

Stearns said his family’s company has been in business for 50 years and he doesn’t understand why Chrysler wants to take away its franchise when the business is still profitable.

“They’re not buying the cars back, they’re not buying the parts back, they’re not buying the special tools back,” he said.
“We’ve got 60 cars to sell with no incentives or rebates.”

Dealers were informed Thursday morning through United Parcel Service letters whether they would remain or be eliminated.

The cuts are likely to devastate cities and towns across the country as thousands of jobs are lost and taxes are not paid.

Cranford said City Motors employs 25 workers and has contributed to the community for decades.

It has occupied its current building since 1969.

Likewise for Stearns.

“I have 25 employees and most of them have been with me since we opened (the Graham dealership) 19 years ago,” Stearns said.

It’s as though the company is saying, “'Those cars are yours, tough luck, do what you can with them,’ ” Stearns said. “It’s just, 'so long.’ It’s unbelievable.”

Chrysler Vice Chairman Jim Press called the cuts difficult but necessary. He said the list of dealers is final and there will be no appeal process.

A hearing is scheduled June 3 in U.S. Bankruptcy Court in New York for a judge to determine whether to approve Chrysler’s motion.

“The really scary thing is you just don’t know what your rights are,” Cranford said.

The 3.5 million customers who bought vehicles from the affected dealers will be notified about the closures, and their warranties will still be honored, Chrysler Vice President Steven Landry said.

Cranford, who said car service is the largest part of City Motors’ business, said the company is still doing warranty work, but he’s not even sure whether Chrysler will reimburse City for that.

Stearns didn’t try to hide his amazement Thursday, questioning the logic of the cuts.

“We don’t cost them any money,” he said. “They make money on us. Everything they ship us they charge us for.”

He knows the strategy is to attract more attention to fewer Chrysler, Jeep and Dodge dealers to maximize profits, as Lexus dealers do, for example, with their strategy of exclusivity.

But that doesn’t wash in his mind.

“That’s what they want but they don’t have the same customers, they don’t have the same car, it’s not the same game,” Stearns said. “People don’t walk in a Lexus store thinking they’re going to buy a car for 16 or $17,000.”

He and many dealers were making a modest profit, even in bad times, he said.

Chrysler “did not take their franchise away because they were sorry dealers,” he said. “It’s kind of an embarrassment. I don’t want anybody to think they weren’t doing a good job … that’s not true.”

The Associated Press contributed to this report.

Contact Richard M. Barron at 373-7371 or richard.barron@news-record.com