Chrysler today delivered bad news to about a quarter of its 3,200 dealerships nationwide. They'll have to close so the company can straighten out its finances - and hook up with Italian automaker Fiat. Thirty-two of those doomed dealers are in California. KPCC's Brian Watt talked to one Southland Chrysler dealer whose name was on the list.
Brian Watt: Ken Phillips owns five dealerships in California and Washington state. His company bought Car Pros Chrysler Jeep in Carson three years ago. Now, there's only one thing he can do:
Ken Phillips: Close it up.
Watt: Phillips says he has $5 million worth of Chrysler inventory on his lot. He says Chrysler won't buy it back, so he'll hold a fire sale – and when it's over, the 40 people who work at Car Pros Chrysler Jeep will lose their jobs.
Phillips: The City of Carson is gonna lose huge revenues, and it's just ugly.
Watt: Chrysler filed for bankruptcy protection two weeks ago. The news of the dealerships closures came on the same day the Federal Trade Commission OK'd Chrysler's planned alliance with Italian automaker Fiat. That's grinds Ken Phillips' gears.
Phillips: You know the sad part about it is, if all this restructure works, and this thing comes out, we give it all to the Italians. If it doesn't work, they walk. You know, I'll lose more money than Italy.
Watt: Chrysler says some dealerships are too close together. Some need to close so the ones that remain open will sell more cars. Brian Maas of California New Car Dealers Association told KPCC's "Patt Morrison" automakers make that argument regularly.
Brian Maas: The problem is that this is being done through the bankruptcy process, rather than letting the marketplace decide which dealers should stay and which should go. Basically, Chrysler's successor company is getting to pick who gets to close, and that's not fair to the dealers or to the communities that they serve.
Watt: One of those communities is Glendale, where Star Chrysler Jeep has to take down its operation on the famous "Brand Boulevard of Cars." Philip Lanzafame of the City of Glendale has been looking at the list of dealerships on the chopping block. He says Chrysler's claim that some are too close together doesn't add up where he lives. He says if Star Chrysler Jeep closes:
Philip Lanzafame: It would be a big distance from dealership to dealership. The San Fernando Valley would be without a Chrysler dealership.
Watt: Lanzafame says the auto dealers on Brand Boulevard represent almost a quarter of Glendale's sales tax revenue. And they employ at least 1,500 well-paid people.
Lanzafame: So when you start to lose those jobs in the economy, you are sliding in a place you don't really want to go.
Watt: The Chrysler dealerships have until June 9th to shut down – or begin the process of fighting to stay open.