Chrysler to eliminate four ME dealerships
Four Maine car dealerships are on Chrysler's list of 789 dealerships it plans to eliminate to remain viable for the future.
The four dealerships received letters today from the carmaker, which filed for bankruptcy protection two weeks ago, informing them of its plans to revoke their franchises by June 9, Tom Brown, president of the Maine Automobile Dealers Association, told Mainebiz. Chrysler filed the list of 789 dealerships it plans to cut in bankruptcy court today.
The affected dealerships in Maine did not return Mainebiz's phone calls as of the posting of this story, but Brown said they can appeal Chrysler's decision to the bankruptcy court. He said the court is required to address the appeals before it finalizes the list, which it is expected to do by next month. Including the four dealerships on Chrysler's chopping block, there are 26 Chrysler dealers in Maine.
The four Maine dealerships on Chrysler's list:
Morong Brunswick
314 Bath Rd.
Brunswick ME 04011
Ballenger Automobile Co.
12 Roberts St.
Sanford, ME 04073
Bowen Bros.
31 Park St.
Livermore Falls ME 04254
Fuller Automall
179 Camden St.
Rockland ME 04841
Chrysler says it needs to reduce its number of dealerships to remain competitive with the likes of Toyota and Honda, which have fewer dealers, but ones that sell more vehicles on average than Chrysler dealers, according to the Wall Street Journal. In 2008, Chrysler sold 303 vehicles per store, while Toyota sold 1,292 and Honda 1,030, the Wall Street Journal reports.
Brown says he doesn't understand Chrysler's logic behind cutting dealers to cut costs. "The manufacturer only takes money from [the car dealers]. They don't spend money on them. The dealers are spending their own money. We're baffled by this theory." Brown says. "The fact that there are less dealers does not, in our view, help the manufacturer's ability to recover from the economic issues they have today. We think, in fact, it's a hindrance."
One of the unfortunate things, Brown says, is that Chrysler, in its letter to dealers, said it would not buy back new vehicles or parts that normally would go back to the manufacturer when a dealership closes, leaving these dealerships with inventory they can't sell. "So it throws them at mercy of the bankruptcy court as unsecrured creditors for those costs," Brown says.
Chrysler did say, however, that it would try to help affected dealers sell their inventory to remaining Chrysler dealers, Brown says. He couldn't say what kind of financial impact this could have on the dealers.
Three of the Maine dealerships -- Morong Brunswick, Fuller Automall and Bowen Bros. -- have other franchises under their umbrella, so will continue operations no matter what happens with the final list. Ballenger Automobile Co. in Sanford is slated to lose its Chrysler dealership franchise, but the owner, Steve McCann, told the Portland Press Herald that he started winding down that part of his business a year ago and plans to focus on the service and sale of used vehicles.
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