Dealers at doomed franchises rap quality of GM, Chrysler
It’s no way to run a railroad, area auto dealers say — produce cars that consistently ride in the rear of Consumer Reports’ annual rankings, and then blame the dealers when they don’t sell.
“Some jerk in Detroit who has ruined his company is going to say I’m an underperforming dealer?” said Jack Fitzgerald, owner of 13 dealerships in Maryland, Pennsylvania and Florida. “I’ve done nothing but grow every year for 43 years.”
Three of his Maryland dealerships will lose their Chrysler franchises by June 9.
Rick Shaub, owner of Montrose Dodge in Germantown, Md., said Chrysler LLC has been behind the curve for years. He owns a single dealership and is losing his franchise.
“They don’t make cars people want. As far as I’m concerned, they’re five years behind everybody else in quality, styling and everything else,” he said. “If people don’t want it, it doesn’t matter who sells it.”
Peter Kitzmiller, president of the Maryland Automobile Dealers Association, said the story is similar at General Motors Corp.
“I don’t know a GM dealer in the country that has performed all that well, and it certainly has nothing to do with the dealer,” he said. “The difference is the product.”
Mr. Fitzgerald said he has been pressing the automakers to improve their consumer ratings for 20 years, and has letters from former GM Chief Executive Officer Rick Wagoner and former DaimlerChrysler CEO Dieter Zetsche to prove it.
“We’re putting a lot of effort into increasing the reliability and quality of our vehicles, which we’re expecting will result in [. . . ] even more favorable ratings from Consumer Reports,” Mr. Zetsche wrote in a 2001 letter to Mr. Fitzgerald.
In the magazine’s April issue, which includes rankings of 2009 models, Chrysler was the lowestrated automaker. GM was second lowest.
Chrysler defended the quality of its cars May 22 in response to an inquiry from The Washington Times. Spokeswoman Carrie McElwee said the new Dodge Ram trucks and Jeep Wrangler sport utility vehicles are getting “great reviews.”
“We do understand that Consumer Reports uses a three-year window of vehicles in order to judge reliability, so it will take time to see the results of the changes that we are putting in place to address reliability and quality concerns of our customers,” Chrysler said.
“Chrysler has a lot of practice explaining its poor ratings,” Mr. Fitzgerald said.
A GM spokeswoman did not immediately respond to an inquiry about its reliability ratings.
Chrysler announced plans May 14 through the U.S. Bankruptcy Court in New York to terminate agreements with 789 dealerships, including 13 in the Washington area.
Ms. McElwee said the 25 percent of the dealerships that are being terminated represent just 14 percent of Chrysler’s sales.
GM said May 15 that it would end agreements with 1,100 dealers. GM’s list was not made public, and no Washington-area dealers have said they are affected. The company is widely expected to join Chrysler in bankruptcy by June 1, at which point its dealer list would become public.
Like most other Chrysler dealers, Jim Gunning of Manassas Dodge in Manassas, Va. is incredulous that the automaker gave him only until June 9 to unload his inventory of about 40 vehicles. After that, he said, he will no longer be licensed to sell new Dodges or to provide warranty service.
“I’m a longtime Chrysler dealer who’s always been loyal to them. I guess this is my reward for sticking with them through thick and thin,” Mr. Gunning said, adding that he has spoken with surviving Chrysler dealers who may buy the cars on his lot.
Mr. Kitzmiller called Chrysler’s timetable “ridiculous.” It is being challenged in court by a group of dealers.
“The idea that the remaining dealers are going to pick up the slack is ridiculous. They’re not. The other dealers already have too many cars,” he said.
“I’m a longtime Chrysler dealer who’s always been loyal to them. I guess this is my reward for sticking with them through thick and thin,” said Jim Gunning of Manassas Dodge in Manassas, Va.
The dealers’ plight spurred action in Congress.
Sen. John D. Rockefeller IV, West Virginia Democrat, said May 20 that the Commerce, Science and Transportation Committee that he chairs would hold hearings immediately after the Memorial Day recess on the “insufficient transition period” and concerns over dealer reimbursement, jobs and vehicle servicing.
Sen. Kay Bailey Hutchison, Texas Republican, on May 21 dropped her effort to force Chrysler to give its dealers more time after assurances from company President Jim Press.
“We will ensure that the [terminated] dealers receive a fair and equitable value for virtually all of their outstanding vehicle and parts inventory,” Mr. Press stated in a letter to Congress on May 21.
Mr. Fitzgerald skeptical.
“What’s fair and equitable?” he said. “Invoice price is fair and equitable, so why not say that?”
Mr. Press said in his letter that the company had 200 field representatives working on the transfer of inventory among dealers.
But Gerry Murphy, president of the Washington Area New Auto Dealers Association, said dealers have heard nothing from Chrysler.
“There’s been no notification to anybody,” he said, but added that he found Mr. Press’ letter “encouraging.”
Mr. Shaub said he was told Chrysler will charge dealers $350 for finding other dealers to buy their cars at cost and for transporting the cars. For 2008 models, he will be charged an additional $1,500.
“Those fees add up to $45,000, and I’m not going to pay that,” he said, suggesting that he could file for bankruptcy to have the cars taken off his hands without fees.
“I have 63 new cars in stock. They’re certainly not going to go to one place. That’s going to take time,” Mr. Shaub said. “The logistics of this are going to go well beyond [June] 9th.”
The 789 Chrysler dealerships that have been terminated have about 45,000 cars in stock, Mr. Fitzgerald said.
Chrysler two weeks ago offered six-year, no-interest loans on some 2008 models to clear inventory before the bankruptcy sale of most of its assets. The program runs through June 1.
Mr. Fitzgerald said he is cutting prices to try to sell his cars before June 9. After that, he said, he expects to have to sell his remaining new cars as used cars for an average of $6,500 less, given the generous incentives Chrysler is offering on new cars.
He is wary of the prices he may be offered by the surviving dealers.
“Dealers aren’t stupid; they’re going to get [our cars] cheaper. They’re not going to pay what we paid,” he said.
Rick Shaub, owner of Montrose Dodge in Germantown, Md., says Chrysler LLC “doesn’t make cars people want” and lacks the quality offered by other automakers.