We are about to feel the real effects of the debate over the future of the American auto industry. Chrysler announced yesterday that it is closing about a quarter of its dealerships including 30 in New Jersey (which includes the Belle Mead Garage on Route 206 in Montgomery and Coleman Chrysler-Jeep on Route 130 in East Windsor). General Motors is expected to begin closing dealerships, as well.
Chrysler said it will eliminate 789 dealers — or one-fourth of its 3,200 franchises nationwide — early next month so it can focus more on high-volume stores. The cuts are likely to be devastating in communities where car dealers are the biggest small business in town, with thousands of jobs and millions of dollars in tax revenue on the line.
“Businesses will close, and in many cases, given the state of the real estate market, you will have boarded-up commercial structures,” said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers. “New Jersey’s members of Congress did not vote for the auto bailout because they have a soft spot for Detroit. It’s because they have a soft spot for the 36,000 people who are employed at New Jersey dealerships.”
Dealers were told yesterday morning whether they would remain in the Chrysler fold or be terminated June 9. Chrysler vice chairman Jim Press called the cuts “difficult” and said the terminated dealers have no right of appeal. Car dealers are normally protected by state franchise laws, although such protections are usually superseded by federal bankruptcy law.
“This is a difficult day for us and not a day anybody can be prepared for,” Press told reporters during a conference call. “There are no winners and losers today.”
I haven’t seen any job-loss estimates tied to the 30 dealership, but you have to assume that several thousand will be looking for work — salesmen, business-office personnel, mechanics, etc.
And there will be ancillary impacts: vacant buildings, lost revenue for neighboring businesses (restaurants, etc.), lost tax revenue for communities.
Hank Kalet 