2 Valley dealers must close

STAFF/WIRE REPORT

TWO AREA DEALERS ARE among the 789 dealerships nationwide that Chrysler intends to close next month.

Frederick Chrysler Jeep Dodge in Boardman and Preston Chrysler Plymouth Jeep in Warren are on an elimination list that was filed Thursday with bankruptcy court.

Chrysler plans for the dealerships to stop selling vehicles June 9. Its plan must be approved by the court, however, and a hearing is set for June. 3.

Officials at the Frederick and Preston dealerships could not be reached for comment.

Frederick has had a roller-coaster ride the past few years. It announced in 2005 that it was selling its location on the west side of Market Street to make way for a new Saturn dealership owned by Jim Pace. Frederick planned to build a new $5 million Dodge dealership in front of Southwoods office complex.

The move was blocked by court action because of deed restrictions on the property, however. In 2006, Frederick bought the Chrysler and Jeep lines from Greenwood Market Motors and opened at Greenwood’s location just down the street at 7871 Market St.

Preston also has a BMW franchise at the Warren location. In addition, it operates Toyota and Hyundai dealerships in Boardman and Toyota and General Motors dealerships in New Castle, Pa.

Chrysler wants to eliminate roughly a quarter of its 3,200 U.S. dealerships, saying in a bankruptcy court filing that the network is antiquated and has too many stores competing with each other.

Many of the dealers’ sales are too low, the automaker said, with just over 50 percent of dealers accounting for about 90 percent of the company’s U.S. sales.

Dealers were told Thursday morning through United Parcel Service letters if they would remain or be eliminated. The cuts are likely to devastate cities and towns across the country as thousands of jobs are lost and taxes are not paid.

Even for dealers that were not included on the list, Thursday’s news was not easy to handle.

“It’s heart-wrenching,” said Chuck Eddy, whose Austinown Chrysler dealership was not cut. “I’ve grown up in this business. My dad’s been with Chrysler since ’57. I’ve grown up with a lot of these families. That’s all I’ve ever known — Chrysler.”

Chrysler Vice Chairman Jim Press called the cuts difficult but necessary. He said the list of dealers is final and there will be no appeal process.

“This is a difficult day for us and not a day anybody can be prepared for,” Press told reporters during a conference call.

A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York for the judge to determine whether to approve Chrysler’s motion. Judges often rely on companies in bankruptcy to help determine what is in their best business interest, such as the closure of dealerships or cancellation of contracts.

Chrysler executives said the company is trying to preserve its best-performing dealers and eliminate ones with the weakest sales. More than half of the dealerships being eliminated sell less than 100 vehicles per year, they said, and account for 14 percent of U.S. sales.

The company is also trying to reduce the number of single-brand dealerships to bring all three Chrysler brands — Jeep, Chrysler and Dodge — under a single roof, they said. It also wanted to limit competing dealerships.

“We recognize in the short term we will see some loss of sales,” Press said. “But based on the long term ... the dealer [network] is key and it’s going to be very strong, powerful, with a much better financial viability.”

The 3.5 million customers who purchased vehicles from the affected dealers will be notified about the closures and their warranties will still be honored, said Vice President Steven Landry.

Chrysler dealerships aren’t the only ones scheduled to get bad news this week. General Motors Corp. says it is notifying 1,100 dealers that it will not renew their franchise agreements when they expire at the end of September 2010.