Are privately-owned Chrysler dealerships being taken with NO compensation?

[Little-Acorn]

If true, this is stunning. Part of me says it can't be true. I'm trying to find ways to verify or disprove it.

It does jive with President Obama's stated intention to "return the wealth to its 'rightful' owners", and otherwise "spread the wealth around". But I frankly didn't expect him to do it in such a baldfacedly larcenous way.

------------------------------------

http://www.americanthinker.com/blog/2009/05/letter_from_a_dodge_dealer.html

Letter to the editor

My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.

We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability.

I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.

On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.

Our facility was recently totally renovated at Chrysler's insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.

HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?

THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY

This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.

This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

I beseech your help, and look forward to your reply. Thank you.

Sincerely,

George C. Joseph
President & Owner
Sunshine Dodge-Isuzu

----------------------------------------------------------------

Before you ask, yes, this guy is legitimate:

SUNSHINE DODGE INC
840 SO HARBOR CITY BLVD 41373 DT
MELBOURNE, FL 32901-1999
GEORGE C JOSEPH

 

[PLC1]

On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them.

Taken by whom?

Yes, if the government is really taking private property without compensation, as we are being led to conclude, then it is indeed a stunning revelation.

Of course, the government takes private property all of the time under the asset forfeiture laws, but then that is not anything new. Taking dealerships without compensation raises the act of abusing the fifth amendment to a whole new level.

However, in the memory of Paul Harvey, let's wait for the rest of the story.

 

[top gun]

Nobody is taking anything.

The manufacturer was going bankrupt and is only going to distribute cars through the dealers they think will be the most profitable and sell the most of their products. The alternative is just to have the whole company fail and EVERY dealership close.

This is Capitalism. When the Right screams cut workers wages or fire the workers in the assembly plants that's great to them. But this upsets them?????? It's a corporate decision about company viability.

 

[PLC1]

Nobody is taking anything.

The manufacturer was going bankrupt and is only going to distribute cars through the dealers they think will be the most profitable and sell the most of their products. The alternative is just to have the whole company fail and EVERY dealership close.

This is Capitalism. When the Right screams cut workers wages or fire the workers in the assembly plants that's great to them. But this upsets them?????? It's a corporate decision about company viability.

Ah, so the article in American Thinker is blasting an action by capitalists! It must, therefore, be a socialist tabloid, right?

 

[BigRob]

Nobody is taking anything.

The manufacturer was going bankrupt and is only going to distribute cars through the dealers they think will be the most profitable and sell the most of their products. The alternative is just to have the whole company fail and EVERY dealership close.

This is Capitalism. When the Right screams cut workers wages or fire the workers in the assembly plants that's great to them. But this upsets them?????? It's a corporate decision about company viability.

I may be off here, but as I understand it most car dealerships own the cars they have on the lot, not the parent company. Therefore, to come in and take those cars without compensation is tantamount to simply taking someone's private property.

 

[Andy]

I may be off here, but as I understand it most car dealerships own the cars they have on the lot, not the parent company. Therefore, to come in and take those cars without compensation is tantamount to simply taking someone's private property.

As I understand it, no the car are not taken, but the ability to market based on the manufacturer is. He's not losing inventory per say, but he is losing value. Think about how non-franchise dealerships are treated.

A dealership without a franchise backing, is the rough equivalent to a used car lot. Joe's Cars, just in title only, isn't going to be able to sell like Joe's Chrysler Dodge.

The result is, buyers are not going to see the dealership more like an isolated used car lot, rather than a new car dealer. Especially since, he will no longer be getting new cars.

So his current stock of more than $3 Million that he owes to the factory, will not sell for as much if he were a manufacture dealer. Nor will he be able to provide service for the cars.

So he has pretty much had his exspensive jump into auto dealerships stripped away. And to be honest, it really is due to Obama.

That said, it's only due to Obama because he gave Chrylers money. If that had not happened, Chrysler would still have gone bankrupt just like they did, and many dealership would have been cut, just like they are. It would have been better if we had saved billions and let they file chapter 11 without sucking down Billions of tax money that our children will have to repay.

But as for as this guys dealership, it would have happened either way.

 

[pocketfullofshells]

first you need to get off this Obama controls all the cars thing...next have this owner go read his Dealership/franchise agreements. My bet is
1. he is misrepresenting what is happening
2. he does not know what contract he has.
3. the government has ZERO to do with this, but some people just want to act like Obama is in charge of everything ( same people who cried its his fault for some new car that came out...even though the car would have been started 5 years ago to be at the stage it was at anyway....)

 

[PLC1]

As I understand it, no the car are not taken, but the ability to market based on the manufacturer is. He's not losing inventory per say, but he is losing value. Think about how non-franchise dealerships are treated.

A dealership without a franchise backing, is the rough equivalent to a used car lot. Joe's Cars, just in title only, isn't going to be able to sell like Joe's Chrysler Dodge.

The result is, buyers are not going to see the dealership more like an isolated used car lot, rather than a new car dealer. Especially since, he will no longer be getting new cars.

So his current stock of more than $3 Million that he owes to the factory, will not sell for as much if he were a manufacture dealer. Nor will he be able to provide service for the cars.

So he has pretty much had his exspensive jump into auto dealerships stripped away. And to be honest, it really is due to Obama.

That said, it's only due to Obama because he gave Chrylers money. If that had not happened, Chrysler would still have gone bankrupt just like they did, and many dealership would have been cut, just like they are. It would have been better if we had saved billions and let they file chapter 11 without sucking down Billions of tax money that our children will have to repay.

But as for as this guys dealership, it would have happened either way.

I think you have most of it right, but your last paragraph is puzzling.

If Obama hadn't given Chrysler money, then it would have gone belly up sooner, and would have ended franchises sooner.

So, why is it Obama's fault that the dealerships are being lost now?

It is Bush and Obama's fault that trillions were spent on trying to bail out failing companies. The former started the bailouts, the latter continued and expanded them.

Let's put blame where blame is logically due, and let's spread it around a little. Congress gets some, too.

But, the blame cast on government has to be for having wasted a great deal of money and increased the debt. The corporations that made poor decisions and then got government money share a large part of that blame, too.

Let's be generous, after all. There is plenty of blame to go around.

 

[pocketfullofshells]

I think you have most of it right, but your last paragraph is puzzling.

If Obama hadn't given Chrysler money, then it would have gone belly up sooner, and would have ended franchises sooner.

So, why is it Obama's fault that the dealerships are being lost now?

It is Bush and Obama's fault that trillions were spent on trying to bail out failing companies. The former started the bailouts, the latter continued and expanded them.

Let's put blame where blame is logically due, and let's spread it around a little. Congress gets some, too.

But, the blame cast on government has to be for having wasted a great deal of money and increased the debt. The corporations that made poor decisions and then got government money share a large part of that blame, too.

Let's be generous, after all. There is plenty of blame to go around.

its his fault because he does not like him.

 

[top gun]

I may be off here, but as I understand it most car dealerships own the cars they have on the lot, not the parent company. Therefore, to come in and take those cars without compensation is tantamount to simply taking someone's private property.

And who in their right mind would believe that?

If a dealership OWNS vehicles outright... they are their vehicles. The dealerships that can't sell their vehicles and don't want to be stuck with NEW vehicles and no new car dealership might allow them to be passed on to other dealerships to be sold and compensated for them at point of sale but no one is taking a paid for vehicle and saying... oh, hey, you just loose all the money you had invested in this.

In many cases the dealerships are working off a loan called a "floor plan". Where a bank... or sometimes the manufacturer itself is fronting most of the costs of the vehicles while they set on the lots.

But if a dealership has completely paid off a car... then that's their car.

 

[pocketfullofshells]

And who in their right mind would believe that?

If a dealership OWNS vehicles outright... they are their vehicles. The dealerships that can't sell their vehicles and don't want to be stuck with NEW vehicles and no new car dealership might allow them to be passed on to other dealerships to be sold and compensated for them at point of sale but no one is taking a paid for vehicle and saying... oh, hey, you just loose all the money you had invested in this.

In many cases the dealerships are working off a loan called a "floor plan". Where a bank... or sometimes the manufacturer itself is fronting most of the costs of the vehicles while they set on the lots.

But if a dealership has completely paid off a car... then that's their car.

yep, same at my current job, hence one more reason healthy banks are needed. they started cutting back alot how much we could loan, cutting back what he had in stock, hurting sales, and forcing a new set of sales
deals to make the nothing in stock system work. One they cut back how much we could loan overal, and 2, they take a percent out that goes as kind of a insurance against a company going under...with so many going under it went from like 2% of purchase to 10%...thus much less money for the company to get product we needed. lucky for us, same happed to the comp so they had to do the same thing so that helped slow some lost sales.

 

[top gun]

yep, same at my current job, hence one more reason healthy banks are needed. they started cutting back alot how much we could loan, cutting back what he had in stock, hurting sales, and forcing a new set of sales
deals to make the nothing in stock system work. One they cut back how much we could loan overal, and 2, they take a percent out that goes as kind of a insurance against a company going under...with so many going under it went from like 2% of purchase to 10%...thus much less money for the company to get product we needed. lucky for us, same happed to the comp so they had to do the same thing so that helped slow some lost sales.

Sounds to me like you're one of the experts on this board on the auto industry. I really appreciate it when someone in a particular field can post some inside types of experiances.

I know some from dealing with car dealerships back when I owned my autobody shops back in the late 80's & thru most of the 90's... we did a lot of dealer work so you hear a lot of inside stories.

And my friend's family has been in the used car business forever... he started his own lot about 10 years ago and has built it up from 5 cars (yes I said 5 cars) that he basically borrowed off his Dad's lot to over a 50 car inventory of his own now... 2003 up to 2007 models.

But back to the new car dealers. They were talking on the radio today about why Chrysler for instance made the decision to cut back dealerships. They said over half of the dealerships being cut were way under performing... many were only selling 100 cars or less A YEAR. Now you know that's bad for a new car dealership. Most of the others had borderline sales but were just too close together.

The analyst said they couldn't invest in training or upgrade their facilities or advertise the way the Chrysler felt they needed to to be competitive.

Makes sense to me.

 

[pocketfullofshells]

Sounds to me like you're one of the experts on this board on the auto industry. I really appreciate it when someone in a particular field can post some inside types of experiances.

I know some from dealing with car dealerships back when I owned my autobody shops back in the late 80's & thru most of the 90's... we did a lot of dealer work so you hear a lot of inside stories.

And my friend's family has been in the used car business forever... he started his own lot about 10 years ago and has built it up from 5 cars (yes I said 5 cars) that he basically borrowed off his Dad's lot to over a 50 car inventory of his own now... 2003 up to 2007 models.

But back to the new car dealers. They were talking on the radio today about why Chrysler for instance made the decision to cut back dealerships. They said over half of the dealerships being cut were way under performing... many were only selling 100 cars or less A YEAR. Now you know that's bad for a new car dealership. Most of the others had borderline sales but were just too close together.

The analyst said they couldn't invest in training or upgrade their facilities or advertise the way the Chrysler felt they needed to to be competitive.

Makes sense to me.

I would not say I was a expert on it overall, but on this board I will take it lol. And my current job is big ticket sales as well, but not care ( thus why I am actuly making money still lol)

and yea dealers to close are a major issue. while not a ford dealer, we had a lincon mercury dealer accross the street....its pretty hard to say your better then the comp...when there cars are your cars just upgraded or styled differnt. it was so anoying lossing a sale to accross the street on a escape, becuse the mariner they liked style wise more....and of course both cuts prices to get sales from one the other...

also people dont know how much it cost to be a big time dealership for the company. like I stated before, our dealership alone , ford spent more then a million bucks in training for 4 guys, to know those cars in and out, and make our dealership a blue oval dealer ( meaning we could do alot more service then other ford dealers) even the hireing costs are high, they pay a company to do it for them basicly, but turnover is so high, and you need so much training to know the cars, and even more on how to sell them. Nice thing is I am on a program where if I ever want get back in, or even just move someplace else, i make a call, and the company I trained with, hits up all the dealers in teh area for you and helps you get a job where ever. its a nice saftey net, though I could do it myself, it helps.

and 5 cars is not that bad, hey as long as you sell one a week and make 500 profit each, thats a paycheck at least, and way to get started.

what I find funny, is just how bad some people are at the sales part, I find it hard to belive some of these people can pay for food let alone make a living doing it. The good ones, I have gone back and looked for years later, even when I did not buy the first time.

 

[top gun]

I would not say I was a expert on it overall...

and 5 cars is not that bad, hey as long as you sell one a week and make 500 profit each, thats a paycheck at least, and way to get started.

what I find funny, is just how bad some people are at the sales part, I find it hard to belive some of these people can pay for food let alone make a living doing it. The good ones, I have gone back and looked for years later, even when I did not buy the first time.

Well you have a good perspective on the auto industry and it's good you can add something to the board on this issue.

And you're right about people that really just almost seem to have it in their blood on how to sell cars... or anything I suppose.

For instance my buddy used to sell cars for his Dad before we partnershiped up on a body shop. When his Dad started out he did the Buy Here Pay Here thing. He used to laugh about it.

He said the people he had to deal with were terrible. They always had no more than a few hundred dollars, no credit and barely a job... but hey on the other hand the cars were only guaranteed to make it off the lot and they had a set of keys to go pick them right back up as soon as they missed 2 payments.

There were times when he & his Dad would sell the same car 3 or 4 times to different people before someone actually paid it off!

But his Dad knew how to make money. He'd basically get just about every dime he had in a car as a down payment... this was $400 to 800 dollars back in the 80's when I first met them. He'd buy up the bottom end dealer trade ins. I don't think he ever paid more than a grand for a car. And he'd almost triple the price he sold it for. A $600 car for $1800 and such. And he'd go get the cars quick if someone tried to stiff him.

But he kept moving up reinvesting in the business. The cars he started buying got better & better. He went to almost all bank financing. Opened a second lot directly across the street from his original lot (both were old closed gas stations that he converted).

And he made a small fortune over the years. His son and I sold our body shop after 6 or 7 years... I started another one... and now he's very successful at his own car lot.

He's got what you talked about.

 

[pocketfullofshells]

Well you have a good perspective on the auto industry and it's good you can add something to the board on this issue.

And you're right about people that really just almost seem to have it in their blood on how to sell cars... or anything I suppose.

For instance my buddy used to sell cars for his Dad before we partnershiped up on a body shop. When his Dad started out he did the Buy Here Pay Here thing. He used to laugh about it.

He said the people he had to deal with were terrible. They always had no more than a few hundred dollars, no credit and barely a job... but hey on the other hand the cars were only guaranteed to make it off the lot and they had a set of keys to go pick them right back up as soon as they missed 2 payments.

There were times when he & his Dad would sell the same car 3 or 4 times to different people before someone actually paid it off!

But his Dad knew how to make money. He'd basically get just about every dime he had in a car as a down payment... this was $400 to 800 dollars back in the 80's when I first met them. He'd buy up the bottom end dealer trade ins. I don't think he ever paid more than a grand for a car. And he'd almost triple the price he sold it for. A $600 car for $1800 and such. And he'd go get the cars quick if someone tried to stiff him.

But he kept moving up reinvesting in the business. The cars he started buying got better & better. He went to almost all bank financing. Opened a second lot directly across the street from his original lot (both were old closed gas stations that he converted).

And he made a small fortune over the years. His son and I sold our body shop after 6 or 7 years... I started another one... and now he's very successful at his own car lot.

He's got what you talked about.

yea you just hit the auctions you can do realy well. thats in part how I got my 1998 contour ( now I got the 2000 with the 6) for 3000 when blue book was about 7-8000 on it...just needed some basic work, small body fix, and could have sold it for a big profit had I wanted to.