Chrysler Dealers Make Case Against Closings

DETROIT — The calls from Chrysler officials were coming nearly every day, sometimes several times a day, right through the final weeks before the company filed for bankruptcy. And the message, said Robert Archer, who runs three Chrysler dealerships in the Houston area, was simple: Take more cars.
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“They tell me, ‘The only way that we can survive is if you order cars, and Fiat and the government see money coming in,’ ” Mr. Archer said.

He acquiesced, he said, thinking he was doing his part to save the company. “I’m a team player and I don’t want them to go out of business, so I ordered a ton of cars.”

Then, a week ago, Chrysler told Mr. Archer, a dealer for three decades, that his three stores were among the 789 dealerships the company was eliminating as of June 9. Mr. Archer had 700 new vehicles and $1.7 million in new parts in stock when the letters arrived.

Now, Mr. Archer is among 330 dealers, calling themselves the Committee of Chrysler Affected Dealers, who are contesting the company’s action. Next week and on June 3, the bankruptcy judge handling Chrysler’s case will consider their objections.

Many of those fighting the hardest are dealers who recently spent huge amounts of money to stay in the company’s good graces, who sacrificed their own profits to help keep the company intact or who otherwise thought they had bent over backward to ensure that Chrysler could survive, only to learn that they were the ones who would not.

“I’m mad at myself for being duped all these years by them and going along with all of the things they wanted me to do,” said Homer Cutrubus, a Chrysler dealer in Utah since 1969. “If I treated my customers like Chrysler treated me, I wouldn’t have any business.”

For years, Chrysler had been urging Mr. Cutrubus and other dealers to combine dealerships with just one or two of the company’s brands into “alpha” stores selling all three: Chrysler, Dodge and Jeep. It stepped up that pressure in February, he said, and in April he finally agreed to move his Dodge store in Layton, Utah, into a Chrysler-Jeep showroom half a mile away, even though he thought the change made little sense financially and had to be done at his own expense.

Included in the exhibits filed in bankruptcy court is an e-mail message from a Chrysler official in Denver to Mr. Cutrubus that said the company wanted to keep only one of the four area dealerships, preferably him. It concluded, “Are you our guy?”

“I called them the next day and said, ‘Yeah, we’ve got a deal,’ ” Mr. Cutrubus said. Six weeks later, after he already had spent $100,000 making the move, he got the letter cutting all his franchises.

Chrysler executives this week defended their decision to cut a quarter of its dealers and the process they used to determine which dealers should be eliminated. They said stores were evaluated on a number of factors, including sales, customer satisfaction, location and condition of the dealership.

If Chrysler does not streamline its operations and complete the proposed sale of its good assets to the Italian automaker Fiat, “the stark reality is all 3,181 dealers will face elimination,” Steven J. Landry, the company’s vice president of North American sales and marketing, said in a statement.

“It was not an easy decision to ask the court to reject a portion of our dealer contracts, but the reality is Chrysler’s viability depends on a vibrant, profitable dealer network,” Mr. Landry said. “As presently configured, Chrysler’s dealer network does not meet that test.”

Mr. Landry also argued that the company was “treating the rejected dealers fairly by assisting in the redistribution of remaining vehicle and parts inventory, paying incentive and warranty payments due.” But many dealers disagree.

Chrysler is not buying back any inventory, including the vehicles and parts that dealers say they never wanted and bought only under pressure. And the entire process, which gives them only until June 9 to liquidate everything, is far from fair, they contend.