DETROIT - Some of the stories tug at the heart. One Birmingham, Alabama, car dealer whose family has owned the business since 1908 lost his Chrysler-Jeep dealership Thursday, when Chrysler LLC announced 789 dealers will close down “on or about June 9.” He told The New York Times he was anxiously awaiting word on Friday about the fate of his Buick dealership — given the age of that brand, likely the one his great-grandfather started with 101 years ago. General Motors said Friday that roughly 1100 “underperforming” dealers out of its surviving 5969 would get letters informing them they will stop getting shipments of cars and trucks by the end of 2010. It’s up to the dealers to name themselves, GM said. The automaker will not release a list. So as of today, we can feel sorry for about 1900 small business-people across the nation, plus their salespeople, mechanics and other personnel who will lose their livelihoods in the next 18 months or so. Many of those “small businesspeople” — perhaps most — are (or were) millionaires. Many of them own other dealerships; say the 1400 operated under the Toyota banner, or another 280 Lexus dealerships in the U.S. At least a few must be like the Studebaker dealership operating in my childhood neighborhood, which switched to Fiat shortly after Studebaker went away in 1966. That Fiat dealership is long gone, so it can’t take advantage of that brand’s impending return to the U.S. You’ll notice that our friend, the Birmingham Chrysler-Jeep dealer is not Chrysler-Dodge-Jeep. Much of the 789 that Chrysler cut the other day are smaller dealerships that failed to keep up with the “Genesis Program,” which sought to triple all Chrysler, Dodge and Jeep dealers. This gives Chrysler, now in Chapter 11, the opportunity to cut duplicate, badge-engineered cars like the Chrysler Sebring and Dodge Avenger. If the Birmingham dealer hasn’t combined his Buick store with GMC, he’s more likely to be among GM’s 1100 eliminated. Meanwhile, Chrysler placed perhaps the most entertainingly transparent “positive spin” on its cuts announced Thursday . “Chrysler files papers to retain majority of dealer network,” its release read. This glass-half-full take is that 2392 of its 3181 dealers get to stay in business…assuming, of course, the automaker emerges from the other side of the 30- to 60-day bankruptcy. After that, Chrysler will be much smaller and leaner, with Fiats and Alfa Romeos rebadged as small Dodges and maybe Chryslers. Probably not Jeeps: Fiat could do to Chrysler what Chrysler did to AMC. About 1986, Chrysler Corporation bought American Motors and eventually stripped down that automaker (remember the AMC-Renault Eagle Medallion?) to Jeep. Across town, GM seems to be racing the economy in closing down its dealerships. It had about 6280 dealers by the end of 2008, already down some 400 from the previous year. Now, it has 5969, and its viability plan to the U.S. Treasury plans on 3600 dealerships by the end of 2010. GM dealers about to get notices make up 1100 of that nearly 2400. Another 470 Saturn, Hummer and Saab dealers soon won’t be part of the GM family, one way or another. The New York Times reported in April that Saturn lost 45 of its 420 stores after GM announced it would end support of the brand. By the time CEO and President Fritz Henderson announced Pontiac will go away, there were only 35 standalone Pontiac dealerships in the U.S. (It has traditionally been a big brand in Canada, sometimes selling at Chevrolet levels, but Canadian franchise laws make it easier for GM to close those contracts than in each of our 50 states.) That leaves about 800 dealers that GM figures will close due to attrition by the end of ‘10, unless it needs to make another cut after the initial 1100. There’s one other aspect to the problem of American-brand auto dealers. Ford Motor Company today has 3723 Ford and Lincoln-Mercury dealerships in the U.S., more than GM plans to have by the end of next year. Ford began cutting dealers in 2005, when it had 4393 in the U.S.A Ford spokeswoman notes that the company has worked with dealers to rationalize coverage in places like Buffalo, New York, which had 17 dealers in the metro area in ‘05 and has 11 now. Each dealer sells more cars and trucks, on average, and is more profitable, both because of the higher volume and because there’s less inter-brand competition. Ford will need to cut more dealers to keep up with GM, assuming that GM’s market share in the U.S. remains higher than Ford’s (and Toyota’s). Neither GM nor Ford will get down to the 1680 Toyota and Lexus dealers in the U.S., because both companies still have loyal customers in rural areas where Toyota, so far, has much fewer dealerships. (That explains as much as anything why the Tundra has been a sales failure, so far.) GM and Chrysler’s actions this past week will put longtime family dealerships out of business, while contributing to the nation’s soaring unemployment rate. In the long run, it should make GM, Chrysler and their dealerships more profitable. Fewer dealerships will make it easier to cut production to rational levels. Which brings up one drawback: it’ll be harder to get a killer deal on your 2011 GM or Chrysler vehicle.
