The livelihood that Rick Shaub has known his entire life changed in minutes Thursday when he got the call that the Germantown car dealership his family has owned since the end of World War I was one of hundreds to be closed by financially troubled Chrysler LLC in the coming month.
Shaub, who has $2.5 million worth of cars on the lot at Montrose Dodge that Chrysler won't buy back, said he will probably have to file for bankruptcy-law protection, too.
Chrysler said Thursday it was closing 789 of its 3,200 dealerships as it works to restructure in bankruptcy-law protection and merge with Italy's Fiat Group SpA. In Maryland, 15 dealerships would be affected by the closures. Chrysler's bankruptcy filing listed 17 Maryland holding companies, but one of the dealerships was located in Florida and another could not be found at the listed address.
The company, which said the dealerships would close around June 9, thinks it has too many showrooms that are too close together. Closing some would create more profitable and competitive dealerships, the automaker believes. It was also looking to create dealerships that sell all of its brands under one roof.
"A very important element in our restructuring is to assure that our new company emerges from its bankruptcy process with a powerful new dealer body," Jim Press, vice chairman and president of Chrysler, said during a conference call with analysts. "The bankruptcy process allows us a once-in-a-lifetime chance to accomplish a right-sized, realigned dealer body and allows us to address the dealerships with significant performance or satisfaction issues."
But the closings could also leave many owners who have known nothing but the car business in financial ruin and could hit local economies hard as thousands of people are in danger of losing their jobs and sales tax revenues fall if people buy fewer cars. The average car dealer in Maryland employs about 64 people, according to the Maryland Automobile Dealers Association.
General Motors is also expected to announce 1,100 dealer closings this week.
"Certainly it's unfair from my perspective, having done so much for the company," Shaub said in a phone interview Thursday. "But nothing is unusual in this environment anymore. No one has ever seen business like this, so there has to be some fallout."
Press called the cuts tough but said it was better than a company liquidation where no dealer survives. "This is a difficult day for us and not a day anybody can be prepared for," he said.
