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Thursday, May 14, 2009 RSSSEND TO A FRIENDPRINT
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Top 10 Stories
NADA Statement on Chrysler's Dealership Reduction Announcement
Chrysler Memo Says 789 Dealers Will Close by June 9
U.S. Treasury, Chrysler Dealer Shutdowns Necessary
Nardelli: A Need to 'Rightsize' Dealers
About 1,000 GM Dealers to Get Warning Letters by Friday
GM, Chrysler Urban Dealers Likely to See Bulk of Cuts
Minority Dealers Hit Hard by Auto Crisis
Auto Dealer Angst: Waiting for The Ax to Fall
Congress Under Pressure as GM Bankruptcy Possible
Opinion: In the Auto Industry, It's Adios To The Car Dealer
Top 10 Stories
NADA Statement on Chrysler's Dealership Reduction Announcement

Today’s announcement by Chrysler that it is rejecting 789 of its Chrysler, Dodge and Jeep dealers marks a very sad day in retail automotive history. These dealers and their more than 40,000 employees have done nothing but proudly represent the Chrysler brand through good times and bad, and today find themselves left behind as the company reorganizes itself in bankruptcy court. While NADA understands the realities of the current marketplace, we also know that dealers didn’t cause the situation that Chrysler finds itself in today. Furthermore, we believe that these draconian dealer cuts are not only misguided but counterproductive. Fewer dealers mean less revenue for the automakers. Dealers are the manufacturer’s customer; they buy the cars and parts and even the signs in front of their dealerships. NADA fully expects Chrysler to honor all its obligations to the affected dealers who have been nothing but good partners over the years. NADA will continue to work aggressively on all fronts with regard to assisting these dealers during these historically challenging times.
Source: NADA Newswire

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Chrysler Memo Says 789 Dealers Will Close by June 9

Cuts will put estimated 38,000 people out of work
Chrysler LLC will eliminate 789 dealers, or 25 percent of its U.S. network, by June 9, according to a memo sent today to retailers in one sales region. Dealers are learning of their fate via UPS letters ... the memo says. Dealers will get 23 business days for a "court review" of their cases, according to the memo, from a sales manager to district dealers. "Chrysler will not be required [per bankruptcy law] to buy back the vehicles or tools and parts from rejected dealers," the memo says. "We will match you with an accepted dealer(s) to buy your parts, tools and vehicles."
Source: Automotive News

[Editor’s Note: In response to Wednesday’s efforts on Capitol Hill, Reps. Dan Maffei (D-N.Y.) and Christopher Lee (R-N.Y.) have written a letter to President Obama’s auto task force asking his administration to provide more transparency and justify the forced closure of hundreds of neighborhood dealerships. Reps. Maffei and Lee are asking for other members of the House to support their efforts. Dealers are strongly encouraged to call their representatives and urge them to sign the “Maffei-Lee dealership letter.” Members of Congress can be reached through the Capitol Switchboard at (202) 224-3121. The deadline for signatures is Friday, May 15.]

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U.S. Treasury, Chrysler Dealer Shutdowns Necessary

WASHINGTON -- The U.S. Treasury Department said on Thursday that Chrysler's decision to shut down 789 of its 3,181 dealers was a "necessary" step to help the troubled carmaker rebound to health. "A stronger Chrysler, supported by an efficient and effective dealer network, will provide more stability for current employees and the prospect for future employment growth," the Treasury said in a statement. The Obama administration's auto task force "played no role" in deciding which or how many dealers would close in the consolidation plan, it added.
Source: Reuters

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Nardelli: A Need to 'Rightsize' Dealers

Chrysler says a smaller network will be stronger and more profitable, but at least one dealer says he'll fight his termination in court
Chrysler ... said on Thursday, May 14, that it is ending franchise agreements with 789 dealers, about one-quarter of the company's dealership roster. "As an important part of our creation of a new company with Fiat, today we took a major step toward rightsizing our U.S. dealer network and aligning it with the realities of a smaller overall market," Chrysler CEO Robert Nardelli said in a letter to employees published on the company's Web site. "Our goal is to create a dealer network that is stronger, more profitable, and better able to meet and exceed the high expectations of today's car and truck buyers."
Source: BusinessWeek

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About 1,000 GM Dealers to Get Warning Letters by Friday

Chrysler dealers also expected to get notices
The letters will be sent Thursday to about 1,000 "underperforming" dealers and will arrive at their dealerships on Friday, said one of the sources familiar with GM's plan. The letters will warn dealers that their franchise agreements will not be renewed when they expire in October 2010, the sources said. GM has said it plans to cut about 2,600 dealerships by the end of 2010. GM expects to lose about 500 more dealerships through natural attrition this year.
Source: Automotive News

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GM, Chrysler Urban Dealers Likely to See Bulk of Cuts

General Motors Corp. and Chrysler LLC dealers in urban areas ... probably will suffer the most when the companies reveal this week which stores will close. More than 100 dealers [asked Members of Congress Wednesday] to urge President Barack Obama’s automotive task force to slow down the automakers’ dealership-closing plans. “The task force, in conjunction with Detroit’s finest, is making a big mistake,” said Alan Starling, a Chevrolet and Saturn dealer ... from St. Cloud, Florida.
Source: Bloomberg

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Minority Dealers Hit Hard by Auto Crisis

Minority car dealers are expected to be hit hard as General Motors Corp. and Chrysler LLC trim their retail networks ... The National Association of Minority Automobile Dealers estimates that 140 of Chrysler's 170 to 175 minority-owned franchises could be closed, and at least 174 of GM's 300 minority-owned dealers could shut their doors. "We're more vulnerable," said NAMAD President Damon Lester. "We were the last ones to come to the table."
Source: The Wall Street Journal

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Auto Dealer Angst: Waiting for The Ax to Fall

For 70 years, Scott Allen's family has been selling Cadillacs in Southern California. As early as today, he could learn from General Motors Corp. whether that family tradition will be allowed to continue. He's not alone. "We've been thinking about this for a long time," says Allen, cautiously optimistic that Crestview Cadillac in West Covina and Bewley Allen Cadillac in Alhambra, Calif., will make GM's cut. "It has to go very fast. Without dealers ordering cars and trying to sell 'em to somebody, it's game over."
Source: The Detroit News

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Congress Under Pressure as GM Bankruptcy Possible

Lawmakers are under pressure from constituents and interest groups like labor, car dealers, and suppliers to intervene as the Obama administration reviews the GM business plan and prepares the company for a possible bankruptcy filing. In meetings last week on Capitol Hill, GM CEO Fritz Henderson fielded concerns of lawmakers from the primary auto states of Michigan, Ohio and Indiana. He also met with officials from Missouri, California, New York, Minnesota, Texas, Georgia, Illinois and Colorado.
Source: Reuters

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Opinion: In the Auto Industry, It's Adios To The Car Dealer
By Douglas A. McIntyre

In an economy that is losing nearly 600,000 jobs a month, the new efficiency program from Detroit is going to add to the burden of unemployed Americans very quickly. By placing the large car companies on short leases, the Administration is insisting that they destroy decades-old relationships with suppliers, shareholders, debtholders, and dealerships. It is not entirely clear that the destruction won't be more expensive than the bailout.
Source: TIME

[Editor's Note: Douglas A. McIntyre is editor of 24/7 Wall St., an online financial news and opinion operation that delivers content to sites including TheStreet.com, AOL Finance and The Wall Street Journal online.]

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Quotable
 
"Today’s announcement by Chrysler that it is rejecting 789 of its Chrysler, Dodge and Jeep dealers marks a very sad day in retail automotive history. These dealers and their more than 40,000 employees have done nothing but proudly represent the Chrysler brand through good times and bad ... "

    -- NADA, in a statement following the announcement that 789 Chrysler dealerships will be closed by June 9, NADA Newswire, May 14


"In an economy that is losing nearly 600,000 jobs a month, the new efficiency program from Detroit is going to add to the burden of unemployed Americans very quickly."

    -- Douglas A. McIntyre, editor of 24/7 Wall St., an online financial news and opinion operation, TIME, May 14


"Without dealers ordering cars and trying to sell 'em to somebody, it's game over."

    -- Scott Allen, whose family has been selling Cadillacs in Southern California for 70 years, The Detroit News, May 14

Video Highlights
 
 
Should Government Decide Dealers' Fate? (CNBC)


Auto Dealers Strike Back (CNBC)



Dealers Head to Capitol Hill (CNBC)



The Case Against Closing Dealerships (CNBC)



NADA and the Obama Auto Task Force (PBS, NewsHour with Jim Lehrer)



NADA on Cash for Clunkers (NADA-TV)



NADA on Floorplan Credit Crisis (NADA-TV)



Senate Testimony on Floorplan Loans (NADA-TV)



Banks Turning on American Car Dealers? (WTNH-TV)



EPA Hearing on Fuel Economy (NADA-TV)


 NADA Tackles Industry Crisis
 NADA Chairman Speaks at the Convention in New Orleans
NBC: "Demise of Local Dealerships Leaves Big Dent"
2009 Convention in New Orleans
NADA on the Front Lines


Click here for more video reports.

 
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