Chrysler to close four valley dealerships

staff and wire reports

Published Thursday, May 14, 2009 | 11:07 a.m.

Updated Thursday, May 14, 2009 | 2:26 p.m.

Chrysler LLC wants to close four of its valley dealerships as part of a plan to eliminate roughly a quarter of its 3,200 U.S. dealerships by early next month.

Local dealerships included in the proposed closures are United Dodge, 5750 Sky Pointe Drive; United Chrysler Jeep, 3250 E. Sahara Ave.; Marsh Chrysler Jeep, 8555 W. Centennial Parkway; and Integrity Chrysler Jeep Dodge, 6770 Redwood St.

Chrysler said in a bankruptcy court filing Thursday that the network is antiquated and has too many stores competing with each other.

The company, in a motion filed with the U.S. Bankruptcy Court in New York, said it wants to eliminate 789 dealerships by June 9. Many of the dealers' sales are too low, the automaker said. Just over 50 percent of dealers account for about 90 percent of the company's U.S. sales, the motion said.

Dealers were told Thursday morning through United Parcel Service letters if they would remain or be eliminated.

Integrity announced yesterday that it would be closing this month regardless of Chrysler’s announcement.

The closures will leave Chapman Chrysler Jeep and Towbin Dodge as the only Chrysler dealerships in the Las Vegas Valley.

The move, which the dealers can appeal, is likely to cause devastating effects in cities and towns across the country as thousands of jobs are lost and taxes are not paid.

A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York to determine whether to approve Chrysler's motion.

The U.S. Treasury Department released a statement on Chrysler's move to close hundreds of dealerships, including the four in Las Vegas, saying that it was part of the auto dealer's plan for some time to restructure its finances.

"We understand that this rationalization will be difficult on the dealers that will no longer be selling Chrysler cars and on the communities in which they operate," the statement said. "However, the sacrifices by the dealer community -- alongside those of auto workers, suppliers, creditors, and other Chrysler stakeholders -- are necessary for this company and the industry to succeed. And a stronger Chrysler, supported by an efficient and effective dealer network, will provide more stability for current employees and the prospect for future employment growth."

Chrysler is planning to move forward to keep 75 percent of its dealers, representing 87 percent of Chrysler sales.

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 dealerships aren't the only ones scheduled to get bad news this week. General Motors Corp. says it is notifying 1,100 dealers that it will not renew their franchise agreements when they expire at the end of September of 2010.

In its motion, Chrysler said it has many dealerships that sell one or two of its brands, with Chrysler-Jeep dealerships competing against Dodge dealers as well as other automakers' stores across the country.

"In addition, as suburbs grew and the modern interstate system continued to evolve, longstanding dealerships no longer were in the best or growing locations," the company said in its filing. "Many rural locations also served a diminishing population of potential consumers. Some dealership facilities became outdated. Other locations faced declining traffic count and declining populations."

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.

Chrysler said its dealer network "needs to be reduced and reconfigured in a targeted manner to strengthen the network and dealer profitability and to achieve optimal results for the dealers and consumers."

Chrysler has received $4 billion in federal loans and has been operating in bankruptcy protection since April 30. Its sales this year are down 46 percent compared with the first four months of last year and it reported a $16.8 billion net loss for 2008.