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Rejected Chrysler dealers look for a Plan B

Chrysler terminated its relationship with 789 dealers Thursday. General Motors could do the same with 1,000 dealers Friday.

By Jeremy KutnerCorrespondent / May 15, 2009

Pike County Chrysler Center in Barry, Ill., is one of the 789 dealerships that Chrysler wants to eliminate as part of its restructuring process.

Seth Perlman/AP

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Boston

Car dealer Jim Bickford knew he was going to get a letter from Chrysler Thursday. What shocked him were the contents. He had thought his dealership would be safe: It had outperformed Chrysler nationally, it had good customer-service ratings, and it was the only Dodge outlet in Boston.

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Yet when Mr. Bickford and his brothers gathered together and opened the letter in silence, they learned that Westminster Dodge was one of the 789 dealerships Chrysler no longer wanted.

“I can’t fathom it.… I just can’t believe it,” says Bickford, whose family has sold Chrysler cars since 1977. “We live and breathe Chrysler…. We were absolutely shocked.”

As part of its bid to move out of bankruptcy as soon as possible by shaving costs, Chrysler on Thursday announced its plan to cut about one-quarter of all its dealers nationwide. General Motors is expected to take similar steps, terminating its relationship with about 1,000 dealers, perhaps as early as today. The formal list was filed in a Manhattan bankruptcy court Thursday morning.

In three weeks, Bickford will lose his franchise rights, meaning he can no longer sell Chrysler cars. Just a day before the letter arrived, Bickford had received a shipment of seven new cars from Chrysler. If he can’t sell them or any other car on his lot by June 9 – a nearly impossible prospect – he might have to sell them to other dealers for pennies on the dollar.

“I’m angry. I’m hurt,” says Bickford. “I guess we still have visions of being able to file a protest, and perhaps get some assistance, to have them reconsider their decision.”

Some Chrysler franchises that received the bad news Thursday – referred to by the company as “rejected dealers” – do plan to appeal the decision. But such moves are unlikely to change the ruling, says Robert O’Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association.

“I don’t think there’s a light at the end of the tunnel here,” he says.

What they can do is try to arbitrate a whole range of issues – including how to deal with excess inventory. But the matter of which dealers got the axe is probably final, he adds.

In a statement, Chrysler said the 789 dealers represented 14 percent of the company’s sales volume. Lessening competition among franchises would help the surviving dealerships – and the company as a whole – be more profitable, the statement said.