Legislators, car dealers seek bill to stop closings

Published: Wednesday, June 17, 2009 9:02 p.m. MDT
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A group of Republican legislators and auto dealers recently stripped of their right to sell Chryslers called on Congress Wednesday to pass a bill that would restore their rights and the rights of some 1,100 soon-to-be former General Motors nationwide dealers to sell the vehicles.

The bill, HR2743, the Automobile Dealer Economic Rights Restoration Act of 2009, will prevent Chrysler from trampling on franchise laws, said Rep. Patrick Painter, R-Nephi, who sold Chryslers from 1968 until June 9. He now sells used vehicles.

Chrysler sent letters in late May to 789 dealers across the United States — including 10 in Utah — giving them a week to sell their vehicles to other dealers or back to Chrysler for a penalty. Since Chrysler was in bankruptcy, a judge permitted the company to cut those dealers.

Painter said about 50,000 jobs — salespeople, body shop specialists and mechanics — will be lost as a result of the closed dealerships.

"This is going to be an unintended action of this bankruptcy," Painter said.

John Garff, chief executive of the Ken Garff Automotive and president of the New Car Dealers of Utah, said the actions of Chrysler are "unconscionable" and will put many in financial ruin. GM chose one of Garff's Cadillac stores in California to stop selling its vehicles.

The roughly 2,000 Chrysler and GM dealers represent $20 billion in land, facilities and working capital.

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"We don't understand why they terminated us," said Frank Barber of Barber Brothers Automotive Group, which has a dealership in Spanish Fork that cannot sell Chryslers. Barber believes he may be punished because he was an active member of a dealers council and fought against the company for dealers.

Chrysler spokeswoman Carrie McElwee told the Deseret News that the decision on which dealerships were terminated was data-driven.

"We looked at a number of things," she said, such as sales, shipments, customer satisfaction, warranty repairs, facility capacity and location.

From 1990 to 2007, the industry sold 16 million new vehicles each year. In 2009, they're expected to sell 10.5 million cars, which makes some dealerships unnecessary, McElwee said.

Homer Cutrubus, whose Layton Chrysler and Dodge dealership is now selling used vehicles, said he spent millions to build a state-of-the-art facility to meet Chrysler's standards. This spring, he combined his Dodge store with his Chrysler-Jeep store to make the Auburn Hills, Mich., carmaker happy.

"Three weeks later, we were terminated," he said.

Cutrubus and other dealers said that Chrysler may put a new dealership in northern Utah to serve residents from Bountiful to Brigham City. McElwee said she didn't have any specific information on Utah dealers but said, "It's possible."

"If it's a market that we'd like to be in with all three brands, and if we weren't able to accomplish that previously, we might do that eventually," she said. "Those things take time."

E-MAIL: lhancock@desnews.com

TWITTER: laurahancock

Recent comments

The unions and management get rewarded for bankrupting the company...

Phil | June 18, 2009 at 11:48 a.m.

Chrysler already has a dealership in Brigham City that they did not...

Northern Utah | June 18, 2009 at 8:19 a.m.

They did you a favor,Chrysler will be gone in a few years. Do you...

CB | June 18, 2009 at 8:09 a.m.

Image

The Barber Brothers dealership in Spanish Fork can no longer sell Chrysler cars.

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