Economy Rockford: Chrysler Dealers Get Pink Slips

Chrysler’s announcement yesterday, that it would pull the plug on nearly 800 U.S. dealerships, four here in the Stateline, may not be all bad news, according to one local expert. What will this mean for the future?

“There's too many retail outlets for the number of people consuming product.”

George Schaffner says the American Automakers need a quick fix to become profitable and remain competitive. Schaffner says the best way for Chrysler to achieve that goal is by cutting some of its dealerships. Schaffner also says many communities have so many retailers offering the same product they end up competing against each other and not their true competition, other automakers. Chrysler studied sales, location, market share, and finances of each of its dealers and then determined the strongest. While Schaffner says the news is a blow to the Rockford area, we could benefit down the road.

“What's going to happen is its going to drive up the resale vaules of those cars because your no longer competing against yourself, but what it is also going to do is increase the re-sale value down the road. So really your cost of ownership will be the same if not better. And the dealership and manufacturer will be more profitable. With the fall of the market and the loss in new car sales, it has forced an issue we have been working on for the past 5 to ten years. It has forced the dealers to deal with some issues they have known about for 20 years.”

The dealers can appeal Chrysler\s decision. Meanwhile its D-Day for an estimated 2,400 General Motors dealerships tomorrow, when the automaker announces which retailers it will close.

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