Dealers Split on Chrysler Offer

Automotive News - With just days left on Chrysler Group's offer to reinstate 50 closed stores, some dealers are pleased with the deal the company is offering; some are telling Chrysler to bag it.

"Nobody in their right mind would agree to this," California dealer Richard Carpenter says of Chrysler's terms for costly improvements, and its demand for a five-year waiver on protesting new nearby points.

In certain cases, dealers are pleased with the offers and intend to sign.

"Half of my staff has been calling looking for jobs, and I have customers calling daily wanting to know if we're going back," said rejected New Orleans dealer Mike Comiskey. "I'd like to make a living again, and I think the brand can survive."

Many dealers also are dismayed by the tight 10-day window for a decision on the offers, which began going out March 26. But a Chrysler source said the company is flexible and will talk to dealers who have questions and may need more time.

Carpenter said the store upgrades Chrysler wants could cost as much as $3 million -- and says the company wants the job done in just eight months. In addition to saying no to Chrysler's offer, he's dropping his arbitration case, too.

Harold Johnson, who now sells used cars in Wichita, Kan., said he spent half a million dollars a few years ago to upgrade his store and could save as much as $100,000 in arbitration expenses by signing -- which he plans to do.

One Midwestern dealer said he is leaning against signing because the requirements of the letter he received aren't clear and he hasn't been able to get a clarification from Chrysler.

The seven-page Chrysler letter also attaches a number of conditions that would make it easy for the company to wiggle out of the agreement, said the dealer, who asked not to be identified.

The dealer said Chrysler made the offer while he was in the middle of selling parts back to the company for less than 30 cents on the dollar. If he were to sign, he would have to buy back the parts at full price, resulting in a loss of almost $100,000.

Chrysler has said it is offering reinstatement to 50 closed showrooms that sold the Chrysler, Dodge and Jeep brands under one roof out of 387 that filed arbitration claims.

Chrysler CEO Sergio Marchionne said in a speech last week that the 50 dealerships "are in locations that will benefit our customers but not have an adverse effect on existing partners in our network."

Chrysler was closed for the holiday weekend on Friday, April 2. The company issued a statement on the process: "Chrysler Group offered standard letters of intent in the interest of finding a mutually agreeable alternative to arbitration. The dealerships involved filed for arbitration, signaling they wanted to join Chrysler Group's dealer network."

Leonard Bellavia, a Mineola, N.Y., lawyer who represents dealers, said General Motors Co.'s letters of intent last month to 661 rejected dealerships "were more businesslike, more reasonable and less amorphous" than Chrysler's letters.