Three Alle-Kiski Chrysler dealers tagged for elimination
Three Alle-Kiski-area dealers are among the 789 dealerships that bankrupt Chrysler says it wants to eliminate by June 9.
Two — Kalmar Motor Sales in Gilpin and Verona Motor Sales in Verona — sell the Chrysler-owned Jeep Brand. Lieberth and Sons Dodge in Oakmont sells only Chrysler products.
Kalmar also sells the General Motors lines Chevrolet and Pontiac. It already had been hit with GM's announcement it plans to discontinue the Pontiac brand by the end of next year.
Chrysler dealers got the word yesterday through letters delivered by United Parcel Service. Chrysler is seeking to eliminate about a quarter of its 3,200 dealerships.
"We're taking it in stride," Kalmar manager Len Kalmar said. "It's business as usual."
A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York to determine whether to approve Chrysler's motion.
Dealers are able to appeal, and Kalmar will be among them.
"That's not a done deal," Kalmar said. "We intend to defend our position."
But Bert Molitierno, general manager of Verona Motor Sales, sees himself with few options. His business, started by his wife's father in 1954, sells only Jeep.
"I think it's the most un-American thing I've witnessed in my 54 years on this planet. There was a right way and a wrong way to do this," he said. "I don't think they could've possibly done it any worse than they did."
"If you shake it down and look at it, my tax dollars bailed out the auto industry and put me out of business a the same time," he said.
A statement from the U.S. Treasury Department said President Obama's Auto Task Force was not involved in deciding which dealers or how many dealers were part of Chrysler's dealer consolidation plan. It said sacrifices by dealers are needed for the company and the industry to succeed.
Molitierno said many dealers have tied their personal finances into their businesses, and, like him, risk losing their homes.
"I don't know what our options are," he said. "We kind of heard whispers in the grapevine. Nobody really expected this to happen the way this happened.
"The dealers didn't make any mistakes. We're the ones who kept them afloat the last couple years working for free."
Mike Lieberth, general manager of Lieberth and Sons Dodge, said he had no comment.
In the bankruptcy court filing Thursday, Chrysler said its dealer network is antiquated and it has too many stores competing with each other.
Just over half of the dealers account for about 90 percent of the company's U.S. sales, the motion said.
Chrysler said many dealerships sell one or two of its brands, with Chrysler-Jeep dealerships competing against Dodge dealers as well as other automakers' showrooms across the country.
Kalmar said he thinks Chrysler is targeting the one-brand dealers.
"If we had Chrysler and Dodge and Jeep together, we probably wouldn't be on that list at all," he said.
Chrysler said in its filing that dealers are not competitive enough with foreign brands.
Chrysler sold an average of 303 vehicles per dealer in 2008. Honda sold about 1,200 vehicles per dealer, and Toyota sold nearly 1,300 per dealer.
Closing dealers won't help Chrysler but will hurt consumers, Molitierno said.
"When the banks got their bailout, you didn't see them close any branches," he said. "That wasn't part of their deal. I never seen McDonald's close a franchise because they have too many of them. We make them money; we don't cost them money.
"Chrysler will not be one penny richer because they put all these people on the street."
Although faced with losing two of its three car lines, Kalmar said he is not worried about the continuance of his 70-year-old, family-owned dealership. Chevrolet is Kalmar's best-selling product and accounts for more than 60 percent of sales, he said.
If he loses Jeep, Kalmar said he would continue to honor commitments to customers, such as lifetime inspections, and would still service the vehicles. For warranty service, he said his dealership would take vehicles to other Chrysler dealers on behalf of customers.
"We're the only Jeep dealer in (Armstrong) county. We've got a lot of Jeeps out there, and we want to continue to take care of those folks," he said.
Eileen Devilling, 57, of Gilpin was having her Jeep Cherokee serviced at Kalmar yesterday. She said she was upset at the prospect of Kalmar losing the Jeep line.
"The service at Kalmar's is tremendous. I can't say enough about it. They are very good people to deal with. It keeps you coming back," she said. "We don't want to see them taking the Jeep dealership out of Kalmar's."
Chrysler has received $4 billion in federal loans and has been operating in bankruptcy protection since April 30. It 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.
The Associated Press contributed to this report.