Third-generation auto dealer Charles W. “Chuck” Tator Jr. drove from his business in South Salem to Manhattan last week to make an informal case for his business”™ survival at U.S. Bankruptcy Court. He dropped off a packet of familial and business history for the presiding judge”™s reading.
Tator”™s Dodge dealership in northern Westchester soon could close if sinking Chrysler L.L.C.”™s recent petition in bankruptcy court to jettison nearly 800 dealers nationwide by June 9 is approved. Those dealers account for 14 percent of the company”™s sales volume, said Chrysler officials, who aim to steer those sales to other area Chrysler dealers and reduce their competition. The downsizing would leave about 2,400 Chrysler, Jeep and Dodge dealers in the reorganizing automaker”™s pending partnership with Italy”™s Fiat SpA.
“Chrysler”™s list makes no sense,” said Tator, who has had little sleep and a recurring nightmare of tractor-trailers being loaded with the contents of his auto garage and office since learning his 95-year-old Dodge franchise was on that list in a recent letter from the company. He and a Brewster Jeep dealer are the only ones in Westchester and Putnam counties that stand to have their Chrysler ties severed following a June hearing in bankruptcy court.
“We”™re now calling it the death list,” he said of dealers who might fight the company”™s move in a class action lawsuit being organized by the National Automobile Dealers Association (NADA). “It”™s not just little dealers or poor dealers; there are top dealers they”™re shutting down.”
Tator”™s Dodge in the town of Lewisboro is not among Chrysler”™s top dealers. Tator”™s chief business is his two-mechanic service garage, where he has earned an international reputation and customer base as a custom restorer and repairer of Dodge Viper sports cars. A few years ago, he was selling 40 to 50 Dodge vehicles a year. Car and truck sales in the recession have dropped to 25 to 30 a year, he said.
Two years ago, when Chrysler”™s then-new and now-exiting majority owner, Cerberus Capital Management L.P., canceled his car orders and tried to shut down his “mom-and-pop” dealership as undercapitalized, Tator waged a publicity campaign among Dodge Viper enthusiasts and customers that pressured Cerberus to back off.
Though small, Tator”™s Dodge is a charter Dodge dealer, the third of the original 25 dealerships awarded by the Dodge brothers in 1914. The 52-year-old owner”™s grandfather, George J. Tator, started the business in a converted barn that remains the dealer”™s no-frills office.
“He bought the franchise for $800 and a horse,” the grandson said. In his first full year of business in 1915, George Tator sold 12 autos and met his quota set by the fledgling Dodge company. The South Salem business soon grew and prospered.
Tator thinks that long history of business loyalty and his sealed-with-a-handshake relations with customers should be taken into account by Chrysler.
“Closing me down is like throwing your grandmother down the stairs,” the red-eyed, haggard-faced dealer said last week. “It makes no sense at all”¦We survived the Depression. We survived two world wars. And then it comes to this? I”™m not happy.”
Chrysler said it will work with closed dealers to redistribute new vehicles and parts inventories to the remaining dealer network. No compensation, though, was offered dealers on the list.
“I”™m going to take a huge financial hit,” Tator said. “They”™re going to stick me with all the costs,” including a recent $4,000 wireless upgrade for access to Chrysler”™s computer system.
“This may be my death notice. The amount of money I”™m going to lose, I might have to declare bankruptcy myself.”
Tator said he cannot afford the $4,000 up-front fee NADA wants from each targeted dealer to initiate the class-action suit. “I”™m just a feller, not a Rockefeller,” he said.
Moreover, he noted, Chrysler”™s federal bankruptcy filing makes it more difficult for dealers like him to seek legal protection in state franchise laws.
At Smith Cairns Inc. in Yonkers, President Dwight W. McGuirk agreed with that assessment. McGuirk has been notified by Chrysler that his Jeep franchise at Smith Cairns Jeep and Subaru in Brewster will be closed.
“I got my packet,” he said last week. “There”™s nothing in there” as financial compensation offered rejected dealers. “That”™s what leaves me to think they”™re on solid legal ground to do this.”
Smith Cairns Inc. also sells Ford, Lincoln-Mercury, Mazda, Subaru, and GM”™s Cadillac and Chevrolet brands at its dealer lots in Yonkers, White Plains, Mount Kisco and Brewster. In Brewster, Jeeps make up only a small part of sales volume, with about five sold per month compared with 30 Subarus.?“It”™s kind of a nonissue for me,” McGuirk said of Chrysler”™s move. “I”™m a single-point Jeep (dealer), so I knew I was on the chopping block” for a company looking to shift sales to dealers selling all company brands. He said he does not plan to lay off any of the 18 employees at the Brewster dealership.
As a General Motors Corp. dealer, McGuirk did not receive one of the notices sent by GM this month to 1,100 dealers whose franchises will not be renewed when they expire in fall 2010. It was the first round of planned dealer cuts by GM, which soon could follow Chrysler into bankruptcy.
Another GM dealer in Westchester last week said four or five GM dealers in the county might have received nonrenewal notices. The list was not made public by GM.
Among affected dealers, “Nobody wants to admit it because they don”™t want to lose customers” for the time they remain in operation, said Katonah auto dealer Louis J. Roberti. Two Westchester dealers said to have received the notices from GM did not return calls for comment last week.
“It”™s such a private thing,” McGuirk said.
At his Arroway Chevrolet Saab Hummer dealership, sales this year are down 40 percent from last year, Roberti said. Still his business has weathered the recession and in one to two months will consolidate with Mount Kisco Chevrolet Cadillac, a merger expected to double Arroway”™s sales volume. “It”™s a good deal,” Roberti said.
Other GM dealers in Westchester have not survived the deep economic slump. In Yonkers, Mack Buick Pontiac GMC closed in April; the 535 Yonkers Ave. building is listed for sale or rent. In Harrison, Vail Chevrolet has posted a notice to customers that the Halstead Avenue business is “on vacation until further notice pending legal complications with GM and GMAC.” GMAC Financial Services is the auto dealers”™ lender that has taken over bankrupt Chrysler”™s dealer lending.
Robert J. Vail, who heads the Harrison Chevrolet business and Vail Buick Pontiac GMC in Bedford Hills, did not return calls for comment last week.
According to NADA, GM”™s dealership closings will affect 63,000 employees, while Chrysler”™s bankruptcy strategy will affect more than 40,000 employees.
Chrysler”™s notified dealers, Tator and McGuirk, both were skeptical that the dealer closings will reverse the company”™s fortunes.
“How is this thing going to play out? In six months, this might look like a real stupid move,” McGuirk said. He said other Chrysler dealers “aren”™t going to pick their sales up” significantly from closed dealers who accounted only for 14 percent of national sales.
“Ninety percent of my customers are going to bail on Chrysler,” Tator predicted. “They”™re going to go to a different brand”¦Closing my little business down is not going to save them anything. It”™s going to cost them in the long run.”
“Shutting down dealers makes no sense, especially in this economy,” he said. “The trickledown effect is going to be enormous for the country,” dealing more blows to employment, municipal tax bases and community organizations supported by auto dealers.
McGuirk said large properties vacated by auto dealers will compound the current woes of commercial real estate. “This is really going to saturate the real estate market.”
