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Chrysler bankruptcy hits home |
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 by Gina Hamilton
Coastal Journal staff
BRUNSWICK -- Chrysler LLC will eliminate a quarter of its 3,200 dealerships in the United States by early June, according to a bankruptcy filing on May 14. The 789 dealerships to be closed were notified last Thursday by United Parcel Service letters. The move, which the dealers can appeal, is likely to cause devastating effects in cities and towns across the country as thousands of jobs are lost and taxes are not paid.
In the midcoast, the Morong Brunswick dealership, which carries Chrysler brand Jeep, will lose that part of its franchise. Fortunately for Morong, the dealership also handles Volkswagen, as well as used cars and service, and expects to remain open.
Larry Davis, general manager of the franchise, said that there is likely to be turmoil at the dealership, all the same. “We have a lot of [Jeep] vehicles on the lot,” he said. “Chrysler says it can’t buy them back because of the bankruptcy proceedings.”
What will happen to the vehicles is still unclear. Chrysler is trying to help the dealerships work out sales of cars and parts to other dealerships, Davis said. “But we are also offering some pretty good deals on new Jeeps at the moment, ” he said.
Davis anticipates that the majority of the business will remain active. “We have a strong VW department, as well as selling used cars,” he said. “We might not be able to do warranty service anymore, although no one is sure about that yet. But we will keep our service department busy in any case.”
The franchise was purchased in 1982, when it was an AMC-Renault shop. As Jeep moved from AMC to Chrysler, the dealership transitioned over the years.
“I don’t get it, really,” Davis said. “I don’t cost the manufacturer any money: I buy the cars I sell. The problem isn’t the number of dealerships. The problem is that Chrysler diluted their own product line.”
The company responded that the large number of dealerships in a given area causes each individual dealership’s sales to be lower.
Also targeted for closure of the Chrysler portion of their businesses in Maine are Ballenger Auto Company in Sanford; Bowen Brothers in Livermore Falls; and Fuller Oldsmobile and Cadillac GMC in Rockland.
After months of struggling to stay alive through the use of government loans, Chrysler finally filed for bankruptcy on April 30, after a group of creditors defied government pressure to wipe out Chrysler's debt. The hedge funds were asked to convert their holdings to Chrysler equity. Despite hard-won agreements with Chrysler’s unions, who accepted major concessions to keep the auto giant solvent, the hedge funds would not agree to change the terms of their loans to the company.
The company plans to emerge as a leaner, more nimble company, probably with Fiat as the majority owner. In return, the federal government agreed to give Chrysler up to $8 billion in additional aid and to back its warranties.
Chrysler closed all its plants on May 4, idling thousands, after suppliers stopped shipping parts to the factories, for fear they would not be paid.
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