June 10, 2009|By Andrea Walker | Andrea Walker,andrea.walker@baltsun.com
Laurel Dodge sold its last Chrysler brand car, an Avenger, on Monday, and general manager Elias Kymingham got word a day later that incorporation papers to change the name of the dealership had been processed.
It's the end of an era for Laurel Dodge, which has been doing business with Chrysler since the 1960s.
The dealership was among 789, including 15 in Maryland, that lost franchise agreements with Chrysler as the financially troubled carmaker looks to cut costs and restructure into a smaller, more efficient company. Yesterday was the dealerships' last day as a Chrysler affiliate.
But many of the dealers aren't shutting up shop or walking away quietly. They're reinventing themselves as used-car dealerships and beefing up the body shop and repair side of the business.
Laurel Dodge will become Laurel Auto Sales and Service, and Kymingham said the company is looking to open a Suzuki franchise.
"We're not going anywhere," he said.
There have been some last-ditch efforts to spare the dealerships. More than 25 attorneys representing hundreds of dealers from across the country were in bankruptcy court yesterday arguing that the franchises should remain open, but the judge ruled that Chrysler could close them. Democratic Reps. Frank M. Kratovil Jr. of Maryland and Dan Maffei of New York introduced House legislation Monday that would require that automakers in which the federal government owns an interest honor their commitments to dealerships.
In the meantime, dealerships on the list have spent the past three weeks trying to sell their remaining cars and transition away from the Chrysler business. Chrysler said it would not buy back the 40,000 vehicles left on the lots of the dealers slated to close, so many were worried that they would be ruined financially if they couldn't sell the cars. Instead, some Maryland dealerships said that they've sold more cars than they have in months, though at steep discounts that yield little if any profit. Buyers flocked to their lots thinking they might get a good deal. Dealers who will keep their franchises are in need of cars because Chrysler is not making new cars while in bankruptcy.
Chrysler will help those slated to close to sell cars to dealers that will remain open, but will charge a fee to do so. The dealerships said they have been told that they would receive help only in selling 2009 models with little mileage.
Chrysler did not return phone calls left over two days with the company.
Rick Shaub, whose family has owned Montrose Dodge in Germantown since World War I, had expected to declare bankruptcy as it tries to rid itself of $2.5 million worth of cars. Instead, he said, business has been brisk from customers and from dealers who will remain in business. He had 22 cars left late yesterday.
"We're selling cars like they're going out of style," Shaub said in a phone interview. "The public is pretty sharp on this, and they've realized who is going and who is staying. They're buying cars from us and not the other people."
Shaub said he could lose "a couple hundred thousand dollars" but nothing that will ruin the company financially. He said the company will sell used cars and focus on its service department.
Reed Brothers Dodge Inc. in Rockville was in business before Chrysler ever existed, buying its first car from the Dodge Brothers Co. just a year after the Dodge was invented.
"We were a little shocked and stunned when we got the letter saying our dealership was on the list," said Jeanne Gartner, whose grandfather started the company. She is one of six family members who have an ownership stake in the dealership.
The family is changing the name of the company to Reed Brothers Automotive and will sell used cars and run a body shop and service department. Fortunately, they own the building and the land on which it sits.
The dealership had 40 cars in stock when they were told they would lose their franchise. The company had sold all but six cars as of late yesterday. Gartner said people have been attracted by the deals, which can subtract up to $10,000 from the price of a car when including manufacturer rebates and incentives.
"We have to be very aggressive with our pricing in order to move them," Gartner said. "If it isn't a new 2009 model, we would have to pay it off or take a loss and sell it at auction."
Peter Kitzmiller of the Maryland Automobile Dealers Association said that many dealers will turn to the used car business because they need a way to make a living.
"What everybody has got to remember is that most of these people have mortgages on these properties," Kitzmiller said. "They don't have whole lot of other choices. There are not a whole lot of other uses for a car dealership."
Even though many of the dealerships will still exist, Kitzmiller said, it will still be a hit to the local economy.
"A new-car dealer has three legs - used, new and service," Kitzmiller said. "You're taking one of the legs out. Can you make it work? Sure, but it's going to be very difficult."
Court clears way for sale
The Supreme Court cleared the way Tuesday for Chrysler's sale to Fiat, turning down a last-ditch bid by opponents of the deal. The court rejected a plea to block the sale of most of Chrysler's assets to the Italian automaker. Chrysler, Fiat and the Obama administration had warned that the high court's intervention could have scuttled the sale. A federal appeals court in New York had earlier approved the sale, but gave opponents until Monday afternoon to try to get the Supreme Court to intervene. Justice Ruth Bader Ginsburg ordered a temporary delay just before a 4 p.m. deadline Monday. Now the court has freed the automakers to complete their deal. The opponents include a trio of Indiana pension plans, consumer groups and individuals with product-related lawsuits.
- Associated Press
