For Many Chrysler Dealers, Bankruptcy 'A Relief' The Chrysler bankruptcy deal announced by the White House Thursday will require sacrifices from all sides, including many dealerships. But some dealers are welcoming the bankruptcy, saying that the possible consolidation will offer safety for the dealerships that survive.
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For Many Chrysler Dealers, Bankruptcy 'A Relief'

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For Many Chrysler Dealers, Bankruptcy 'A Relief'

For Many Chrysler Dealers, Bankruptcy 'A Relief'

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Chrysler dealers are listening to all the talk about bankruptcy with great interest. And while they are sure to take a hit in the process, NPR's Martin Kaste reports that many dealers are breathing a sigh of relief.

MARTIN KASTE: This is Town and Country Chrysler-Jeep-Dodge on the northern end of Seattle. And right in the middle of the showroom, sits a gleaming new Dodge Challenger. If you so much as glance at it, Jeff Asmundson leaps into action.

Mr. JEFF ASMUNDSON (Chrysler Dealer, Town and Country Chrysler-Jeep-Dodge): It's black. It's sexy. It goes like a bat out of hell. Can you put that…

(Soundbite of engine starting)

Mr. ASMUNDSON: Put that mic underneath the hood?

(Soundbite of a revving engine)

KASTE: Okay, that's pretty cool.

(Soundbite of laughter)

KASTE: Still, as the exhaust fumes dissipate, the fact remains that this is a Dodge, a brand that's now officially in bankruptcy. How does Asmundson sell that?

Mr. ASMUNDSON: What we say is we have the number one spokesman in the country right now, President Obama, just came in on TV and he said, buy a Chrysler product.

KASTE: But the deal announced by Mr. Obama also means that some of Chrysler's 3,000-plus dealerships will be closed or consolidated with sister brands. American car companies have long had more dealers than the foreign makes, and some say that's been a problem.

Dan Goldberg is a Boston lawyer who represents car companies in their relations with their franchisees.

Mr. DAN GOLDBERG (Lawyer, Boston): If you think about it, if you have an excess of number of outlets to sell your vehicles, then it basically means there is a smaller piece of the pie for each of the dealers. If the dealers are less profitable, then they'll be less vigorous competitors against other line makes.

KASTE: But much as the carmakers would have liked to shut down the excess showrooms, they've been stymied over the years by state franchise laws, usually passed in state capitols at the urging of big local car dealerships. But now with Chrysler, those protections may disappear.

Mr. GOLDBERG: The dealers' rights with respect to that issue will be governed by bankruptcy law, rather than by the state laws. And the bankruptcy court will be able to determine which dealer agreements are going to be accepted and continue in effect, and which are not.

KASTE: The dealers just don't have a lot of legal options in this situation. Even John McEleney, chairman of the National Automobile Dealers Association, admits that the closure of franchises will now be up to the bankruptcy judge. He hopes the court won't act capriciously.

Mr. JOHN MCELENEY (Chairman, National Automobile Dealers Association): Dealers did not cause the problem. They don't represent any cost to the manufacturer. And if a dealer is able to stay in business and be profitable and take that risk in this environment, we think they should be able to continue. If they don't or can't, then they're going to go out of business and that's happening every day.

KASTE: And that's why this bankruptcy filing has actually been greeted as good news by Chrysler dealers like Jim Arrigo in Florida. Yesterday, he got his staff together to watch the president announcing the deal on TV.

Mr. JIM ARRIGO (Chrysler Dealer, Florida): If you could've seen the relief in their faces when it was all over, you'd understand that this was a big piece to us going forward. I mean, just a week ago, it could have been that we were closing for good.

KASTE: Bankruptcy may mean the end of some of Chrysler's weaker dealerships in certain overcrowded markets, but it also promises to give stronger dealerships like Arrigo's another lease on life.

Martin Kaste, NPR News.

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