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Chrysler moves to eliminate 789 dealers

May 14, 2009 8:50:49 PM PDT
Chrysler LLC wants to eliminate 789 of its U.S. 3,200 dealerships, saying in a bankruptcy court filing Thursday that the network is antiquated and has too many stores competing with each other. The company, in a motion filed with the U.S. Bankruptcy Court in New York, said many of the dealers' sales are too low. Just over 50 percent of the dealers account for about 90 percent of the company's U.S. sales, the motion said.

DOWNLOAD PDF DOCUMENT: List of dealers Chrysler is asking the bankruptcy judge to approve for closing.
List of Illinois Chrysler dealerships marked for closure

A total of 44 dealerships are closing across the state. Twenty seven are in the Chicago area and northwest Indiana.

The deadline for closing is June 9.

Balzekas Motor Sales has sold Chryslers through good times and bad. They've been loyal to the automaker since shortly after Stanley, Senior first opened the dealership in the 1920's. But they say a letter delivered by UPS from the company on Thursday morning showed them their loyalty apparently means little. Chrysler is cancelling their contract.

"They're destroying the automobile industry. I feel very sorry about that," said Stanley Balzekas, president.

It is a relatively small dealership but it is the only one left in the neighborhood. They are a vital part of the community. They opened the Balzekas Museum of Lithuanian Culture.

"We are on our sixth and generation of sales of people. They stayed with us through everything. And we have customers from New York because they were friends here in Chicago," said Carole Balzekas, employee.

Balzekas is one of several dozen dealerships Chrysler that is closing in an effort to cut costs as they reorganize under bankruptcy. But while it may save the company it is likely to hurt communities.

"It has immediate impact on the communities that these dealerships are in. The dealerships generate a lot of tax revenue for those communities," said John Phelan, Chicago Auto Trade Association.

Chrysler is cutting them off completely though, leaving the dealers with whatever inventory they have, including parts. Stanley Balzekas estimates it will cost him about $2 million. Bigger dealerships will likely take a bigger hit.

Loyal customers have a message for Chrysler.

"Leave them alone. And give them all the support they need because they have done that for the community," said Gloria Taylor, customer.

Employees and customers of General Motors dealerships meantime are worried they may get the same bad news tomorrow when g-m announces dealership closings. Mike Helmstetter is hoping his business will survive.

"There's some good dealerships that will not be in business," said Helmstetter.

Chrysler spokeswoman Kathy Graham would not comment other than to say the company will notify dealers before speaking publicly.

Chrysler dealerships aren't the only ones scheduled to get bad news this week. General Motors Corp. says it is notifying 1,100 dealers that it will not renew their franchise agreements when they expire at the end of September of 2010.

In its motion, Chrysler said it has many dealerships that sell one or two of its brands, with Chrysler-Jeep dealerships competing against Dodge dealers as well as other automakers' stores across the country.

"In addition, as suburbs grew and the modern interstate system continued to evolve, longstanding dealerships no longer were in the best or growing locations," the company said in its filing. "Many rural locations also served a diminishing population of potential consumers. Some dealership facilities became outdated. Other locations faced declining traffic count and declining populations."

Chrysler has received $4 billion in federal loans and has been operating in bankruptcy protection since April 30. Its sales this year are down 46 percent compared with the first four months of last year and it reported a $16.8 billion net loss for 2008.

The Associated Press contributed to this report.


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