Three local dealerships are among 789 that Chrysler intends to eliminate from its dealer network by June 9, part of a move to consolidate sales and cut distribution costs.
Chrysler has about 3,300 dealerships; the 789 represents about 25 percent being eliminated mostly because their sales are too low, according to a motion filed Thursday with the U.S. Bankruptcy Court in New York. The dealers represent 14 percent of Chrysler's U.S. sales, the company said Thursday in a conference call with reporters.
Belvidere Motors, 1201 N. State St., Belvidere; Strandquist Motor Co., 601 W. Jefferson St., Rockford; and Lou Bachrodt Auto Group, 7070 Cherryvale North Blvd., Rockford, would be removed from Chrysler's dealership network if the request is approved. Belvidere Motors' only new-car line is Dodge. Strandquist's new-car brand is Chrysler vehicles. Lou Bachrodt, the area's second-largest automotive dealer, sells Jeeps and several non-Chrysler brands.
Chrysler's 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," according to a statement from the company.
Dealers are not competitive enough with foreign brands, according to court documents. Chrysler sold an average of 303 vehicles per dealer in 2008. By contrast, Honda Motor Co. sold about 1,200 vehicles per dealer, while Toyota Motor Corp. sold nearly 1,300 per dealer.
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.
But sales weren't the only factor. The company eliminated brands from some successful dealerships because the Chrysler products weren't a main focus, "for example, when Jeep is stuck in a dealership and is not the featured franchise," said Steven Landry, Chrysler's executive vice president of North American sales.
That would apply to Bachrodt, where Jeeps are sold along with BMW, Volkswagen and Chevrolet.
Executives from Belvidere Motors and Lou Bachrodt were unavailable Thursday. Dean Zimmerman, general manager of Strandquist Motors, said it plans to continue operating in downtown Rockford with or without new Chrysler vehicles to sell.
"We've been around 65 years, and we plan to see 70," Zimmerman said.
If the court approves the motion, Boone or Ogle counties would have no Dodge dealer -- the Ogle County Dodge dealership went out of business several months ago -- and Winnebago County would have no Chrysler or Jeep dealers.
Dealers who survived Thursday's cuts think that will change, though.
Chrysler has been trying for several years to combine all three of its brands to one dealer, similar to Bryden Motors in Beloit, Wis., which sells Dodge, Chrysler and Jeep.
"This would help my sales share, but I would be willing to bet there will end up being a Chrysler-Dodge-Jeep dealer in Rockford. It's too big of a city not to have one," said Roger Krahenbuhl, owner of Krahenbuhl Chrysler Jeep in Rochelle.
Jack Wolf, owner of Jack Wolf Chrysler Jeep, 1615 N. State St., Belvidere, is glad that his 46-year-old dealership and its 85 employees survived the cuts, and he'd be interested in adding Dodge to his brands. Still, he had mixed emotions.
"I was very excited that we were selected to be one of the dealers with the new auto company," said Wolf, who also sells Pontiac, Cadillac and GMC vehicles at a separate Belvidere dealership. "But I feel very bad for the dealers that were not selected. Dealers are very helpful to each other, and all the auto dealers give back to the community. It's a sad time."
Under the mega-dealer concept, the area's largest dealer, Anderson Automotive Group, may be able to add Chrysler and Jeep to its lineup. Anderson has Anderson Dodge on East State Street as well as several dealerships that sell Ford, Mazda, Hyundai, Kia, Mitsubishi, Toyota, Suzuki, Scion, Nissan and Lexus.
"We were fairly confident prior to the list coming out. We're doing good business," Anderson Dodge General Manager Dave Lusz said. "I know we're going to go on here and be part of this new thing. We'll be here selling cars for a long time."
Chrysler dealerships aren't the only ones scheduled to get bad news this week. General Motors is expected to notify 1,100 dealers Friday that it will not renew their franchise agreements when they expire at the end of September 2010.