Dealers at doomed fran­chises rap qual­ity of GM, Chrysler

The Washington Times Weekly - - National - BY WILLIAM EHART

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.

re­mained

“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.

MICHAEL CON­NOR/THE WASH­ING­TON TIMES

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.

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