Chrysler Axes Its Dealers

Earlier, I discussed the Chrysler bankruptcy.  Yesterday, one of the results of the bankruptcy was announced.  Chrysler would sever its relationships with one quarter of its franchises.  Nearly 1000 dealerships will be shut down.  This is something that would be very difficult to do if not for the filing of bankruptcy.  Chrysler believes that they have too many dealerships.  But from what I understand, the dealerships are not a cost to Chrysler.  What they really want to do -- long term --- is reduce the competition that now exists when there are so many dealerships for the same make of automobile.  Which means higher prices.  The reality is that the margin for most dealers is very slim on the sale of new cars.  They really depend on repairs and used cars to make money.  But without the Dealership imprimatur, most of these businesses will probably go out of business.

We have been Dodge customers for many years.  Although we have only purchased one vehicle from a new car dealer, we were continually shopping and looking at cars for much of the last 15 years.  We spent a lot of time stopping in at Chrysler/Dodge dealerships in the Washington area.  A lot of those dealers will no longer be associated with Dodge.  

As I stated in my earlier posting, I have a real hard time envisioning us buying a new Dodge in the future.  And if we, loyal customers, cannot be counted on, what future does this company really have?  The cutting of dealerships may or may not help the bottom line, but when I have to go farther to get my car serviced and have to compete with more customers to get parts or to have my car serviced, I am sure that I will not be a happy camper.

Sadly, I predict that, like Circuit City last year, these bankruptcy measures have only begun the process of the eventual liquidation of the Chrysler company.  It would take an incredibly creative and talented individual along the likes of a Steve Jobs or a Lee Iacocca to remake this into a successful company.   And with the government and unions so heavily involved in all automobile manufacturing, but especially GM and Chrysler these days, I just cannot see anybody ever having enough freedom to run this car company successfully.