May 15, 2009 8:22 am US/Eastern
Chrysler Dealers: 'They Turned Their Back On Us'
Automaker Cites Antiquated Network, Too Much Internal Competition
PARAMUS, N.J. (CBS) ―
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Chrysler LLC has told a bankruptcy court it plans to eliminate 789 of its dealers - or about 25 percent of them - across the country as part of its restructuring process. (File)
Roberto Schmidt/AFP/Getty Images
With the news that auto giant Chrysler plans to close hundreds of dealers as part of its reorganization with little notice, local dealers, employees and customers alike are left in a big bind.
Tenafly Chrysler Jeep and Dodge of Englewood are two of more than 700 dealerships across the country that Chrysler is shutting down.
"I had to notify just around 50 people today that our business has been terminated, that they no longer have a job," said Kevin Ormes, owner of the dealership.
Ormes got a courtesy call on Thursday morning delivering the news, and he's angry.
"Over the past months, they've begged us to buy vehicles, they've begged us to do everything for them and when it came time to do something for the dealers that basically invested everything that they have, they've turned their back on us," he told CBS 2.
The automakers, which has been operating in bankruptcy since April says it is targeting dealers with low sales. It wants to drop 40 dealerships in the tri-state area, including 22 in New Jersey, 11 in New York City, and seven in Connecticut.
Shiela Rosalimskiy works at the Englewood dealership and says she's not surprised.
"This dealership doesn't do anything, it's no activity at all," she said.
Sal Risavalto of the New Jersey Gasoline Automotive Association has been fighting to get automakers like Chrysler to give independent repair shops codes needed to replace parts which they can't get now. He says Thursday's news will hurt consumers.
"More car dealers closing means less choice for consumers to get their car repaired, especially if they cannot bring their cars to independent repair shops," he said.
Chrysler said in its filing that dealers are not competitive enough with foreign brands. Chrysler sold an average of 303 vehicles per dealer in 2008, according to its filing. By contrast, Honda Motor Co. sold about 1,200 vehicles per dealer, while Toyota Motor Corp. sold nearly 1,300 per dealer.
Chrysler said its dealer network "needs to be reduced and reconfigured in a targeted manner to strengthen the network and dealer profitability and to achieve optimal results for the dealers and consumers."
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.
(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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