Some Southland Chrysler dealers tapped for closure are in shock
As troubles escalated in recent weeks for ailing Chrysler, Doug Swaim, general manager at Star Chrysler Jeep in Glendale, was cautiously optimistic.
The store was meeting sales expectations. He was still receiving shipments of new cars. Last week, Chrysler even asked the dealer to help host a customer appreciation event in June.
So Swaim was stunned Thursday morning when he saw Star Chrysler Jeep’s name on the list of nearly 800 U.S. dealers that the automaker is axing as part of its financial restructuring.
“We really were blindsided,” he said. “Based on the criteria that Chrysler had said they were going to use to terminate dealers, we exceeded benchmarks across the board. . . . It looks like they randomly chose us.”
Across the Southland on Thursday, employees and managers at Chrysler dealerships were reeling from the news that the automaker would eliminate a quarter of its U.S. outlets, leaving thousands of workers jobless and local communities with a shrunken source of sales tax income. Thirty-two California dealers were affected.
Dave Miller, general manager of John Hine Pontiac Mazda Dodge in San Diego, heard at 7:30 a.m. that his dealership was on the chopping block. But it wasn’t Chrysler that informed him of the bad news -- it was a co-worker who pulled up the list online.
The biggest shock was learning that the dealership had less than a month to clear out its inventory, Miller said. He had expected at least six months.
“It’s mind-boggling how we’re supposed to liquidate the entire inventory in less than a month,” he said. “We’re really in the dark about how that’s going to happen, and absolutely flabbergasted that they would put the brand at risk by prostituting cars on the market for pennies on the dollar.”
Although manufacturers had promised to try to work with surviving dealers to absorb the extra vehicles and parts, Miller was doubtful.
“You’ve got bankruptcy attorneys running this thing, and they’re not car people,” he said. “They only care about making drastic slashes so they can go to court and ask for their money.”
Affected dealers said they were trying to quickly plan their next steps.
“We are, needless to say, very disappointed, but we will find a way to continue,” Swaim said. “If there is any appeals process, we expect to pursue it.”
At Car Pros Chrysler Jeep in Carson, another dealer tapped for closure, owner Kenneth Phillips said he was planning to lay off 40 employees and hold a fire sale to dump 130 new cars worth $4 million. He also has to get rid of half a million dollars’ worth of parts and $750,000 in fixed assets, he said.
“All the dealers have been on pins and needles for the past few months now,” Phillips said. “We were hoping to survive this, but I guess it just didn’t work out.”
Some dealers said they hoped to survive by relying on sales from their other brands.
At John Hine, 80% of the dealership’s sales come from Mazda vehicles, Miller said. As the Dodge and Pontiac inventory is phased out, the team will be able to focus on Mazda sales, he said.
“It’s been distracting to have three franchises because they all do business completely differently,” Miller said.
The elimination of hundreds of dealerships will also hurt the cities where they’re located.
Carson made $3 million in sales tax revenue from five dealers during the 2006-07 fiscal year, said Jackie Acosta, administrative services general manager for the city’s finance department. The city lost about $500,000 after a Nissan dealership closed several months ago, and stands to lose $400,000 more if the Car Pros Chrysler dealership closes.
In Glendale, new-car dealers kick in about $4 million to the annual budget through sales tax revenue, said Director of Finance Bob Elliot. The closure of Star Chrysler Jeep would cut into that amount, but Elliot didn’t provide an estimate.
“It will affect us, no doubt,” he said. “We don’t want to see any dealers close, but the economy is such that it’s probably tough to avoid.”
The lot at Big Valley Dodge Chrysler Jeep in Van Nuys had been cleared of vehicles for two weeks when owner Howard Sellz received his letter from Chrysler on Thursday.
Although Sellz had already decided to close the dealership in March after months of poor sales, the news didn’t lessen the sting of officially losing the store he’s worked at for 44 years and has owned since 1988.
“I don’t really know who the winners and the losers are,” Sellz, 75, said. “It’s devastating. Look around you -- you see an empty lot at what used to be a vibrant place.”
Over the last year, Sellz has had to lay off 100 employees, including longtime salesman Bernie Zeidman, 79.
On Thursday, Zeidman was back at Big Valley, helping out with odds and ends.
“It was a sad thing to see -- we were one of the biggest dealers on the West Coast and they just put us right out of business,” he said. “Bang, bang, and that was it. It was a shame it had to lead to this.”
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tiffany.hsu@latimes.com
