On April 30, 2009 Chrysler announced it will file for Chapter 11 bankruptcy, on May 14 it released the list of dealerships that would close.
Chrysler LLC has told a bankruptcy court it plans to eliminate 789 of its dealers -- or about 25 percent of them -- across the country as part of its restructuring process.
The number includes 50 Texas dealerships, including 15 in North Texas. The automaker wants to close the dealerships by June 9.
Frank Kent Dodge in Fort Worth, one of the 15 North Texas dealerships, was notified Thursday that was one of the dealerships on the cutting block.
"We got the letter today, and (we're) very surprised that they've decided not to continue on as a partner," owner Will Churchill said.
Frank Kent operates other dealerships, including Honda and General Motors, that absorb the Dodge employees.
"Financially for our employees, there really won't be a big effect," Churchill said.
But the closures could have a devastating impact on cities across the U.S., costing jobs and tax revenue.
"There is definitely a ripple effect," Churchill said. "It goes all the way down the line into every job. I think they say one in four jobs are tied to the automotive industry."
The average dealer spends $16.5 million per year in the community, including sales, payroll taxes and charitable contributions, Taylor said. On top of that, laid-off workers will spend less, and towns will suffer from lost tax revenue.
Local media will feel the pinch, too. The average car dealer spent $341,000 on advertising last year, said Paul Taylor, NADA's chief economist. About a quarter went to newspapers, which are already in a struggle for survival.
The automaker has about 3,200 dealers, but said that's too many. It wants to have stronger, more profitable dealers with better facilities.
Frank Kent plans on appeal Chrysler's decision.
Chrysler Vice Chairman Jim Press called the cuts difficult but necessary. He said the list of dealers is final.
"This is a difficult day for us and not a day anybody can be prepared for," Press told reporters during a conference call.
A hearing is scheduled for June 3 for the bankruptcy judge to determine whether to approve Chrysler's motion.
Chrysler executives said the company is trying to preserve its best-performing dealers. More than half the dealerships being eliminated sell fewer than 100 vehicles per year.
The company is also trying to reduce the number of single-brand dealerships to bring all three Chrysler brands -- Jeep, Chrysler and Dodge -- under one roof.
The 15 North Texas dealerships set to close are:
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.