Chrysler submitted its list of 789 dealerships it plans to cut to the bankruptcy court in Manhattan Thursday and GM was expected to follow suit even though it is not in bankruptcy.
The decision is highly emotional because auto dealers are usually the biggest business in town, often family owned and, apart from maintaining a workforce, play a large role in local politics as well as supporting local charities and youth groups.
Chris Hurd, president of Hurd Auto Mall, a GM dealership on Hartford Avenue in Johnston, questioned the ethics of closing so many dealerships at once.
Citing a natural attrition, he said many dealerships are "multigenerational," and are not only big local employers but play a supportive role in the community.
"There are people and families involved," said Chris Hurd, president of Hurd Auto Mall, a GM dealership on Hartford Avenue in Johnston. "What are you going to do, tell them to go fly a kite? No way."
Indeed, the National Association of Auto Dealers argues there is no sense in rushing to close so many at one time - reportedly up to 3,000 Chrysler and GM dealerships nationwide - considering they do not cost the manufacturers anything.
Apart from the impact of so many employees hitting the unemployment lines, estimated at around 200,000 if 3,000 dealerships are cut, NADA argues dealerships finance not only their buildings but also the inventory of vehicles on their lots.
"The dealers don't cost the manufacturers money," said Jack Perkins, executive director of the Rhode Island Auto Dealers Association. "They buy the cars."
Indeed, American auto makers have been cutting back on their dealerships for a number of years, albeit at the slower rate of natural attrition. Indeed, Perkins said only two years ago there were 14 Chrysler dealerships in Rhode Island compared to the seven before Tarbox Jeep of North Kingstown was cut Thursday.
The rationale is that the number of dealerships no longer reflects the almost 100 percent share of the auto market the Big Three once commanded. Now it is more like 50 percent. The smaller dealers are thus selling fewer new cars and making less money and that can translate into shabbier stores compared to such rivals as Toyota and Honda which have fewer dealerships.
It was not immediately clear whether the dealerships would appeal or what sort of arrangement they could work out with Chrysler.



