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Car dealerships forced to close won't go without a fight

General Motors and Chrysler handed thousands of pink slips to auto dealerships last year, effectively telling them to go away. It did not matter if the dealerships were profitable, well run family-owned businesses spanning generations.

Now more than a thousand of those dealerships, including dozens in Florida, are fighting back. Some may be reinstated as Chrysler or GM dealers or perhaps receive some compensation for closing. The conflict will rage throughout 2010.

Last year, GM and Chrysler were bailed out by the federal government and slimmed down via brief stays in Chapter 11 bankruptcy. Prodded by the feds, the two automakers say the dealership cuts were necessary for survival. Thinning the auto dealer herd seemed to make sense amid 2009's traumatized U.S. auto industry and forecasts of weaker sales.

Florida dealerships were not spared. Chrysler dealers were forced to shutter almost at once, while GM gave their dealers more time to wind down. But the effect was the same.

In the Tampa Bay area, targeted dealers ranged from St. Pete Jeep Chrysler and Tarpon Springs Dodge in Holiday to Lott-Mather Buick Pontiac GMC in Plant City. Nationwide, Chrysler shut down 789 dealers while larger GM targeted some 2,000 dealers for closing.

The backlash was immediate. Hammered on the home front, members of Congress balked at their own get-tough stance with the industry. It passed a law in December allowing GM and Chrysler dealers to appeal decisions to be shut down.

Congress' action to allow arbitration undermined the Treasury Department, which agreed to aid the car companies only if they trimmed their dealerships.

The American Arbitration Association is now handling the appeals that, as of last week, numbered at least 1,573 dealers. About 1,100 of those are GM dealers; the rest are Chrysler.

Out of that overall number, 49 dealers representing a few thousand jobs were based in Florida. Only 10 other states, mostly in the Midwest, have more dealers seeking appeals.

Other dealers are pursuing justice through the courts. Some want to reopen as new-car dealers. Barring that, they want to secure some financial award for losing their livelihood.

Many dealerships protest the arbitrary selection process that hurt their business but spared others. Many told to close remain open but survive not by offering new autos, but by selling used vehicles and providing service.

St. Pete Jeep Chrysler is one of 76 dealerships represented by Washington (state) attorneys Stephen Pidgeon and Leo Donofrio. They are trying to navigate a complex legal scene that includes the "Old Chrysler" (the prebankruptcy automaker) and the "New Chrysler" now controlled by Italy's Fiat auto company.

Pidgeon says anything is possible, even the chance St. Pete Jeep might emerge as it once was. But it's not likely. What Pidgeon wants to do is to get his clients better positioned to be compensated for their losses and make them eligible for damages.

At Sarasota Chrysler, another Florida dealer rejected by Chrysler, former sales manager and managing partner Greg Volack appealed for fairness on the Internet. He is one of dozens of rejected dealers nationwide who have turned to YouTube videos and argue in personal appeals that their franchises were viable and their demises unwarranted.

Three years ago, Volack took over the 25-year-old and profitable Sarasota Chrysler from his father-in-law. In turn, he says he wanted to groom his son to take over from him. No more.

"The American public has lost jobs and taxes and gained nothing" from Sarasota Chrysler's demise, Volack says on his video. "And this has not made Chrysler more solvent."

Third-generation dealer Bill Wallace of Florida Chrysler in Fort Pierce tells on his video how Chrysler axed seven of 10 area dealerships. Now, he says, Chrysler wants to re-enter the Fort Pierce market with "some third-party" organization but is excluding the seven canceled dealerships from seeking a franchise.

"Surely, this is not what Congress had in mind," he says. Probably not — though I doubt Congress even knows what it had in mind, either.

GM shows signs of life since emerging from bankruptcy. Chrysler's fate under Fiat's wing is less clear. Thousands of dealerships and employees — not to mention this country — are still counting on both to rebound.

Robert Trigaux can be reached at trigaux@sptimes.com.

Area dealers squeezed out by Chrysler, GM

Chrysler dealerships

• Jim Boast Dodge, Bradenton

• Sarasota Chrysler, Sarasota

• Tarpon Springs Dodge, Holiday

• Fitzgerald's Countryside Chrysler Jeep, Clearwater

• St. Pete Jeep Chrysler,

St. Petersburg

GM dealerships

• Bartow Pontiac (only Pontiac

line closed), Bartow

• Lott-Mather Buick Pontiac

GMC, Plant City

Source: Edmunds.com



Leaner times

Area new-car sales dropped 25 percent

New car sales by county

2009 sales 2008 sales % change

Pinellas 26,016 32,942 -21%

Hillsborough 33,130 46,607 -29%

Pasco 15,962 19,928 -20%

Hernando 1,964 3,223 -39%

Total 77,072 102,700 -25%

Source: AutoCount

Car dealerships forced to close won't go without a fight 01/30/10 [Last modified: Friday, January 29, 2010 9:08pm]
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