Cairo Association of Teachers - Newsletter

CAT Tracks for May 15, 2009 LOCAL CHRYSLER DEALERS IMPACTED

Saw the complete list of almost 800 dealers on a national news site yesterday, but did not want to be the bearer of bad tidings. Unfortunately, bad news travels fast and the story soon hit the local media.

In fact, the KFVS TV Channel 12 Website has a video for those of you with broadband.

Two "disclaimers":

• The list is a "proposal"...it must still be approved by a bankruptcy judge next week.

• Secondly and more hopefully, Guttermann Motors is not solely a Chrysler dealer. It also handles Ford, Lincoln, and Mercury.

Chrysler plans to close Cape, Cairo dealerships

From staff and wire reports

Chrysler wants to eliminate roughly a quarter of its 3,200 U.S. dealerships by early next month, saying in a bankruptcy court filing Thursday that the network is antiquated and has too many stores competing with each other. Among the 789 U.S. dealerships on Chrysler's list are Auffenberg Chrysler Dodge Jeep in Cape Girardeau, Lucas-Smith Automotive in Potosi, Mo., and Guetterman Motors of Cairo, Ill.

"I expected it," said Jack Guetterman of Guetterman Motors. He said his dealership also is a Ford, Lincoln and Mercury dealer and that he does not expect to lay off any employees.

"We're a small dealership, and our other brands that we sell will keep us going," Guetterman said.

Like Guetterman Motors, Auffenberg is a dual dealership, also selling the KIA brand. In a statement sent to the Southeast Missourian, general manager Darrin Garner believes the list is only preliminary.

"We are working closely with the newly formed Chrysler to resolve this matter and any issues that may exist," Garner wrote. "It is our intentions to carry on with business as usual and we look forward to remaining a part of the Cape Girardeau business force for many years to come."

Lucas-Smith Automotive said it will also continue operating its Chevrolet dealership.

The company, in a motion filed with the U.S. Bankruptcy Court in New York, said it wants to shed 789 dealerships by June 9. Many of the dealers' sales are too low, the automaker said, with a little more than half of dealers accounting for about 90 percent of the company's U.S. sales.

Dealers were told Thursday morning through UPS letters whether they would remain or be eliminated.

Chrysler vice chairman Jim Press called the cuts difficult but necessary. He said the list of dealers is final and that there will be no appeals 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.

Dr. Bruce Domazlicky, a professor of economics at Southeast Missouri State University, is uncertain when the car industry will turn around.

"It will be a slow recovery," he said. "Until you see the unemployment go down and other parts of the economy improve, you won't see the car industry make a significant turnaround."

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

"We're definitely not closing," said Kelly Walker of Morlan Dodge in Sikeston, Mo. "Beyond that, I don't want to make any other comment. It's a real touchy subject right now. The dealership is their livelihood."

Chuck Eddy, a Youngstown, Ohio, Chrysler dealer, called the news heart-wrenching.

"I've grown up in this business," Eddy said. "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 said in its filing that dealers are not competitive enough with foreign brands. Chrysler sold an average of 303 vehicles per dealer in 2008, according to its filing. By contrast, Honda Motor Co. sold about 1,200 vehicles per dealer, while Toyota Motor Corp. sold nearly 1,300 per dealer.

Staff writer Brian Blackwell contributed to this report.

Pertinent addresses:

611 South Kingshighway, Cape Girardeau, MO

2210 Sycamore Street, Cairo, IL

1110 South Main Street, Sikeston, MO

10623 West State Highway E, Potosi, MO

From the Southern Illinoisan...

Chrysler's closings hit region

By Caleb Hale, The Southern

CAIRO - Jack Guetterman Jr. has sold Chrysler vehicles since 1968, he said.

However, Guetterman, who co-owns Guetterman Motors in the Alexander County city of Cairo, along with five other Chrysler sellers in the region, face closure of the product line if the U.S. Bankruptcy Court agrees to allow Chrysler LLC to end dealer agreements with 789 of its 3,188 retail outlets nationwide.

Guetterman wasn't surprised his dealership was on the list to sever ties with the Chrysler line, although he admitted he was surprised the company is seeking to end contracts with so many bigger city dealerships.

Because he also sells Ford, Lincoln and Mercury products, Guetterman says if he loses Chrysler he'll try to make up for it through increased used car sales and new car sales in the Ford Motor Company line.

"I went through this in the early '80s with Chrysler and we came through it," Guetterman said. "This year it is different than it was in the '80s, mainly because of foreign competition. It's not all Chrysler's fault, it's not all the management's, not all the unions'."

If Chrysler pulls its product from his dealership, Guetterman doesn't expect the move will force him to lay off more than one employee.

The company will help dealerships it's ending contracts with sell remaining inventory with deep discounts and incentives, but it won't buy back merchandise, he said.

Illinois has 44 dealerships on the line with Chrysler's proposal. In addition to the Cairo dealership, Pierce Chrysler Center in Du Quoin is also on the list. There was no answer at the dealership when The Southern Illinoisan called Thursday afternoon.

Other regional dealerships that could end Chrysler contracts include Auffenberg Chrysler in O'Fallon, Dave Croft Motors Inc. in Collinsville, Roberts Motors Inc. in Alton and Cape County Autopark Inc. in Cape Girardeau.