About 789 Chrysler dealers are going to have a horrendous weekend as they rush to sell their remaining cars on hand to meet the deadline prior to being shut down. They have until Tuesday to liquidate their stocks, a task that may seem close to impossible considering the financial situation of their areas of concern.

Brunt of the sales will be used cars and while many of us would think that the best way to dispose of these used cars would be a discount deal similar to that of Circuit City, don’t get your hopes up. It is far from happening.

True enough a lot of dealerships are in for some rough days ahead. And while many of them have been ordered to close, there are some who have defied the order, taking Chrysler to court to add some more headaches for the car manufacturing giant. They’ll remain Chrysler dealerships until the bankruptcy judge issues a ruling.

(Source) WBZTV

Tags: bankruptcy judge, brunt, car inventories, Cars, Chrysler, chrysler dealers, chrysler dealerships, circuit city, financial situation, giant, headaches, judge issues

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Chrysler, just like General Motors, is cutting down the numbers and AutoNation has announced that 7 of their dealers will be hit by the dealer closure. As part of the dealer consolidation plan filed by Chrysler today in its bankruptcy, approximately 789 Chrysler dealerships will be closed nationwide.

The AutoNation stores that will be closed by the consolidation plan represented only 1% of AutoNation’s 2008 operating income. AutoNation does not believe that any one-time charges that may be associated with these actions will be material to its continuing operations or debt covenants.

Commenting on the consolidation plan, Mike Jackson, Chairman and Chief Executive Officer, said, “We believe Chrysler’s consolidation plan is a difficult but positive step forward for Chrysler and the automotive retail industry. Dealer consolidation is a necessary measure in today’s automotive industry and will strengthen America’s dealer network and improve dealer profitability over the long term.”

Mr. Jackson commented further, “The consolidation plan is consistent with AutoNation’s long-term strategy that we implemented in 2000 to consolidate domestic dealerships and realign our brand mix more towards import and premium luxury franchises. With our financial and operational strength and diversified brand mix, we are well-positioned to succeed in the rapidly changing automotive retail landscape.”

(Source) Press

Tags: automotive industry, autonation, Bankruptcy, chief executive officer, Chrysler, chrysler dealerships, Closure, consolidation plan, debt covenants, franchises, General Motors, necessary measure, operating income, profitability, retail industry, retail landscape, term strategy, time charges

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Chrysler and General Motors are expected to announce car dealership closures in the coming days and many are awaiting the impact that this would have on local communities.

Chrysler has communicated to 789 of its 3188 dealerships that they will have to close by June 9. Most of the affected dealerships are located in densely populated areas where there are multiple Chrysler dealerships currently competing for the same business. It is estimated that approximately 38,000 people will lose their jobs. It is rumored that tomorrow, General Motors will announce 1,000-2,000 dealership closings.

Local communities who are losing dealerships will clearly see a rise in unemployment. Sales tax is often cited as another area of loss, but this is actually not an overall risk.

“Dealerships may be going away, but customers are not. In other words, when a dealership closes, its customer may buy a competitive product, or buy from another Chrysler dealership. The sales tax is still being paid. The risk for communities is that the tax may shift to a different town,” explained Edmunds.com CEO Jeremy Anwyl.

The closing of dealerships will change the competitive landscape for buyers. Currently, shoppers in saturated markets can essentially instigate “bidding wars” for their business, encouraging dealerships to undercut each others’ prices in competition for each car sale. With fewer dealerships in each area, that will become much harder to do, and buyers will pay more as a result.

Some people mistakenly believe that car companies will somehow save a significant amount of money by having fewer dealerships. In truth, there are only minor savings gained by cutting the regional staff and the streamlining of certain processes required to serve a smaller dealer body.

“As these dealers are more competitive against other brands, sales could increase, at least in theory,” commented Anwyl. “However, in practice, there is risk: One path to profitability for a dealer is through higher profit margins achieved by charging higher prices. As prices rise, other brands become more competitive and consumers may flee. In this way, dealerships may benefit, but manufacturers suffer further sales declines.”

“This move allows Chrysler to eliminate dealerships that did not embrace the opportunity to extend their franchises to include Dodge and Jeep vehicles, which are also owned by the Chrysler LLC parent company,” noted Edmunds’ AutoObserver.com Editor Michelle Krebs. “Chrysler didn’t play favorites in making the decision; a handful of the stores being closed are owned by well-connected industry ‘hot shots.’”

(Source) Press

Tags: amount of money, bidding wars, car companies, car dealership, car sale, Chrysler, chrysler dealership, chrysler dealerships, different town, edmunds, General Motors, landscape, profitability, regional staff, sales tax, shoppers, unemployment

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