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    Chrysler and General Motors announced this week that they would shrink their dealer base in the U.S. Chrysler will close 789 dealers, leaving them with approximately 2400 stores in the U.S. General Motors announced the closing of 1,100 dealers and hopes to be at a size of 3,600 dealers at the end of 2010. While Chrysler dealers will be "forced out" by June 9, GM is positioning for a smoother closing of its stores, with each shutting down when it runs out of inventory. Unlike Chrysler's announcement, GM's list of closing dealers will not be made public, leaving that decision to each dealer.

    What happens to my GM or Chrysler vehicle warranty?
    Your warranty is valid through its term, regardless of where you bought your vehicle. In March, President Obama announced that the U.S. Government would provide the backing for Chrysler and GM vehicle warranties under the "Warrantee Commitment Program."

    Even After Cuts, Do The Big 3 Still Have Too Many U.S. Dealers?

    Some Companies Need Fewer Dealers to Sell Same Amount of Cars
    CompanyNo. of DealersMarket ShareDealers Per 1 pt Market Share
    Chrysler LLC24119.4256
    Ford Motor Co.372315.7237
    General Motors360020.9172
    Honda Motor Co.130412.4105
    Toyota Motor Corp.147015.495

    Market data shown reflective of April 2009, courtesy of Autodata. Chrysler dealer total is effective June 9; GM dealer total is estimate for end of 2010.

    Can I take my vehicle for service and warranty work to another (surviving) dealer?
    Yes, but make sure it's a certified dealer. If you're going to take your Chrysler, Jeep or Dodge vehicle in for warranty work, you can do so at a closing dealership until June 9. After that time, Chrysler will no longer pay those dealers for warranty work. GM vehicles will receive service and warranty work at closing dealers until they shut down.

    Will there be good deals on these vehicles?
    The Chrysler dealerships to close will have about 44,000 units on hand, or roughly what Chrysler, Jeep and Dodge sell across the country every 2-3 weeks (using April's sales numbers as a guide). There will be deals, but be warned that if those 44,000 aren't sold before June 9, Chrysler will work to redistribute them to other dealers. Whether the best deals will be had before or after June 9 is likely negligible; if you're interested in a Chrysler, Jeep or Dodge product, you will save a lot of money on a new purchase right now. One important factor to keep in mind is that approximately 10% of those remaining units are 2008 vehicles. Be careful the car you're looking at hasn't been sitting on the lot inactive for too long; cars actually do "rot." GM's dealer announcement is a different story, since the company isn't releasing the names of the closing dealers. However, inventory on lots of closing dealers amounts to 68,000 units. Dealers who chose to disclose their shut down may provide better deals.

    How many people and jobs are affected by closing dealers?
    The impact on communities will be significant. Since dealers typically employ about 50 people and contract with a handful of suppliers (consider the business that sells paper or office furniture to each dealer), there will be impact within the community. Some economists, however, believe that the impact will be less than expected, since dealers typically have a high turnover rate and technician jobs were in a short supply already. But, the related aspects of dealer closings are certain: think of the little league baseball teams and charities that receive funding from do-gooding dealers. Even real estate is affected; car dealerships usually set the market for commercial real estate in smaller communities. When those go empty, the entire city feels the pain.

    Why Were These Dealers Chosen?
    Both Chrysler and GM have expressed interest to shrink their dealer base. Company officials cite various data points related to choosing these dealers, but the main one is performance. GM said that the average dealer of the 1,100 affected only sold 35 cars in all of 2008. Chrysler cites similar numbers, with half their closing dealerships selling less than 100.

    But, even after these reductions by Chrysler and GM, they still have more dealers than other manufacturers. Using April 2009's sales data as a proxy, Toyota has approximately 95 dealers per 1 point of market share in the U.S., while Chrysler has 256 and GM will have 172 (at the end of 2010). This means that, effectively, Toyota is able to sell more vehicles per dealership.

    Can dealers do anything about this?
    Typically, dealers would have protection under state franchise laws against such events. However, in Chrysler's case, those franchise laws are not applicable since the company declared Chapter 11 bankruptcy. Chrysler dealers can (and likely will) protest the process by which they were chosen (sales volume, number of brands in the store, the area in which the dealership operated). But after June 9, the selected Chrysler, Jeep and Dodge dealers will have to take down their signs. GM dealers will likely organize their own group, but details of that are unclear at this time.


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    1 - 20 of 29 Comments
    bluevtx1800 Jun 16, 2009 2:04 AM
    Obama said he was going to cut the deficit in half, I really don't see him doing that, he is spenting more than any president in history. He said he was going to cut taxes but he is raising taxes for everyone. I just don't get it, he has you people brainwashed, when he said "CHANGE", yeah I can see change all right. He let the the banks stay afloat and charge everyone the highest interest rate in the world but not the auto industry, sounds fishy to me. I agree with 'marchessani, we are going to a socialist state if Obama has his way, UNITED SOCIALIST STATES of AMERICA. I going to laugh in everyone face when they said why did I vote for him!
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    dlm7 Jun 08, 2009 1:09 AM
    Regarding jcgaijin's most recent remarks. 1.) For the record, President Obama is a Christian (though one would hope that all Americans in the 21st Century would defend the our nation's traditional values of religious liberty and freedom from religious discrimination, so if you truly believe in our nation's values you really shouldn't care what religion the president is). 2.) President Obama was born in the U.S.A. (see www.factcheck.org for proof, among other sources). and 3.) Regarding the auto dealerships, the missing key fact here is that the overwhelming majority of car dealerships ARE Republican owned -- those that are staying open as well as those that are closing. The proportions are the SAME. So the president is no more targeting GOP dealerships for closing than he is targeting them for staying open. The majority that are staying open are GOP owned as well, and in the same proportions. So why not praise him for *********** a statistically ridiculous and misguided argument. 4.) The previous president spent 8 years driving this country into the ditch. Now President Obama is working to bring Republicans, independents and Democrats together to create jobs, cut taxes for everyday Americans, fix our broken healthcare system, strengthen our national security, and revive our economy. That's a tall order, and as Americans we need to come together and do what we can to help him succeed.
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    jcgaijin Jun 07, 2009 11:30 AM
    I HATE TO SEE DEALERS GET HURT, BUT THE REPUBLICAN DEALERS WILL BEAR THE BRUNT OF THE BURDEN! ALL YOU LIBS WHO VOTED FOR THE ILLEGAL MUSLIM, BORN IN KENYA, YOU STUPID ASSES HAVE DESTROYED AMERICA! BTW, AMERICA IS NOT A MUSLIM COUNTRY, CONTRARY TO THE MUSLIM'S LYING LIPS! NEXT TIME YOU PULL THE DEM VOTE LEVER, THINK FIRST! AS FAR AS THE OBAMA/UNION OWNED AND OPERATED AUTO MANUFACTURERS, I WILL NOT SUPPORT THESE ASSE. GIVE ME HONDA, TOYOTA, OR ANY NON OBAMA/UNION RAN AUTO COMPANIES! BTW, I AM HAVING AN AK-47 TEA PARTY SOON! ANY TAKERS?
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    casinocwby Jun 06, 2009 4:40 AM
    I'm sorry that I feel this way, ******** hard to feel sorry for any auto dealership, they've over the years won themselves the Giant Trophy, for lying, cheating and stealing, let alone spinning miles back over the years and coining phrases like, &********* a one owner car, owned by a little old lady that drove it only to the grocery store and back, for the past several years" lmao. Why is it, that car dealers/car salesman, have won the 1st place award for being far from HONEST? They've been grouped along with shady lawyers, and cattle theives.. lol I know it's a generalization, but why do we feel those gut feelings when we walk thru the doors of most dealerships? Because our memory serves us right, from the last experience we've had, they will promise you anything to get the deal thru the door. It's almost a feeling a young woman must experience when she walks thru the doors of a bar, and it's full of older men. lol Buyer beware! I worked at a dealership, that's why I have a fondness for calling a spade a spade when it comes to their evil ways. I'm sorry, they are finally getting their due. Forget all the baseball clubs for kids they sponsor, I think they do that out of ************ a nasty business, and it will do some of them well, to find a new way to hustle a buck. Some, on the used lots, belong working at a carnival, about the same mentality! LOL
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    hotheaddad123 Jun 06, 2009 2:53 AM
    obamas bailout plan heck with gm or chrysler just care about the muslims
    Report This
    sjs133 Jun 06, 2009 1:57 AM
    I THOUGHT THAT WE SPENT TRILLIONS OF DOLLARS SINCE 1945 TO PROVE THAT CAPITALISM IS THE SUPERIOR FORM OF ECONOMYAS OPPOSED TO SOVIET SOCIALISM. NOW WE ARE BECOMMING MORE LIKE THEY WERE WHEN THEY COLLAPSED. KNOW WHAT THE AVERAGE WESTERN EUORPEAN PAYS IN TAXES? ABOUT 80%. THEY WORK FOUR DAYS A WEEK FOR THEIR FEDERAL GOVERNMENTS. THE EASTERN EUROPEAN, FORMER SOVIET STATES HAVE MODELED THEIR CONSTITUTIONS AFTER OURS AND ARE SUCCESSFULLY TRANSITIONING THEMSELVES TO CAPITALISM. THEY SHOULD KNOW THEY LIVED UNDER SOVIET SOCIALISM. i'VE BEEN TO RUSSIA AND EASTERN EUROPE NUMEROUS TIMES. HOW IRONIC THAT WE ARE NOW BECOMMING LIKE OUR FORMER FOE AND FORMER ALLIES. DON'T GET TOO ILL OR BREAK A BONE IN CANADS. YOU PROBABLY WILL HAVE A 24 TO 48 HOUR WAIT FOR TREATMENT. USSA - HOW TRUE..
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    k1957 Jun 05, 2009 9:55 PM
    I do not understand why any American would want to have his or her life , family and generally well being controlled by goverment bureaucrats. The Senate and House of Reps is the problem. They make the laws not the President. Do you see them taking salary cuts ? Do you see them curtailing goverment spending? They get automatic salary increases How cozy is that ? Instead of whing about what others have, I made the choice to work two jobs for years. I have a big house,three nice cars. I have savings in the bank. But I worked my ass off for it. I owe the goverment nothing. I live in Gerogia, a pstae that is not overrun with high taxes and large welfare rolls. My largest bill to pay each year is federal taxes. Now im going to be paying for somebodys mortgage, job , daycare ,healthcare, bank, and car warranty. I guess the next thing Im going to have to pay is for his/her burial. The people who have money and make money work more than 40 hours a week. IF you lose a job then go get another one or go back to school. If you sit around and whine all day because its not fair then you will always be a loser.
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    marchesani7 Jun 04, 2009 9:10 PM
    Welcome to the U.S.S.A. UNITED SOCIALIST STATES of AMERICA!
    Report This
    jaunvivamexico Jun 01, 2009 12:00 PM
    JUST WHAT WE NEED GOVERNMENT MOTORS
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    jaunvivamexico Jun 01, 2009 11:58 AM
    THANK GOD FOR OBAMA, HE IS THE SAVIOR FOR US.
    Report This
    jrmag44 May 29, 2009 3:21 PM
    AND I WAS A UNION MAN FOR 32 YEARS AND DRIVE A DODGE CHARGER WHERE IIS THEIR HYBRED. DONT THINK YOUR OVERPAID THINK YOU REALLY DONT THINK....HOW CAN YOU SAY ITS OBAMA FAULT HOW ABOUT THE RANK AND FILE DUHHHHHHHHHHH KEEP DEMANDING MORE MONEY MONEY MONEY
    Report This
    jrmag44 May 29, 2009 2:58 PM
    OBMA FALUT THEY CANT SELL THIER DA ;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;; JERK WHAT A JERK YOU ARE
    Report This
    jrmag44 May 29, 2009 2:07 PM
    lbj033 thank god for obama
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    kawieboy May 19, 2009 11:27 PM
    GM mangement says......work for us with less benefits and have a job...or hold out for Toyota. They need workers in Mississippi and Georgia. Just depends if you want to move forward or stay in Michigan and wait for it to be the 1950's again. 1950's are gone. do what it takes to take care of your famiy and survive. Go Toyota. I own a japanese motorcycle dealership and it's working prettyt good.
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    kawieboy May 19, 2009 11:22 PM
    Funny that the countries that we bombed off the map have the car industry wrapped up. I drive a BMW and my wife drives a Toyota. No problems with them at all. If your an unemployed American auto worker...thank your union. They did such a great job for you...eh ?? Of course you could always leave nasty Michigan and move to warm sunny Georgia and do the exact same job for nearly the same pay and not worry about the crappy management that got you where you are anyway. Just a thought.
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    kawieboy May 19, 2009 11:12 PM
    If GM goes out of business thousands will be unemployed, so let's just close down a thousand dealerships and thousands will be unemployed. Problem solved. Sounds like a good idea to me. And while were at it....free healthcare for 50 million deadbeats. That's the Obama plan. Thank you. Good night.
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    babashire1 May 19, 2009 8:43 PM
    The goverment bails out Chrysler with billions and then Chrysler decides to close it's Kenosha, Wi plant and leave thousands with out jobs while they make plans to build a new plant in Mexico, so the taxpayers foot the bill, we lose the jobs and Mexico gets the benifits, way to go goverment, No woder the country is going to hell fast
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    flashgoddess May 19, 2009 4:46 PM
    Well they wont be getting any of my money, I'll go else where so I wont have to worry about either dealership shutting down. plus they will tell you any thing to clear those lots. Buyers beware,they are going to be telling whoppers for this. They are going to be fighting for as many and as much of a commission as they can. That 25-35 dollar processing fee they charge.....you dont have to pay it, you're just paying for their dinner. If you decide to buy from these dealers...take the car to another shop and have it checked out. Look out for "asis" on the car and paper work, means you're buying it as is with no warranty.
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    lbj033 May 19, 2009 4:39 PM
    WITH OBAMA IN OFFICE THERE WON'T BE A VIABLE INDUSTRY IN THE U.S.--OBAMA IS A COMPLETE IDIOT WHEN IT COMES TO ECONOMICS AND INDUSTRY
    Report This
    lbj033 May 19, 2009 4:39 PM
    WITH OBAMA IN OFFICE THERE WON'T BE A VIABLE INDUSTRY IN THE U.S.--OBAMA IS A COMPLETE IDIOT WHEN IT COMES TO ECONOMICS AND INDUSTRY
    Report This
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    AOL Autos looks at the effects of the news that Chrysler and General Motors will shrink their dealer base in the U.S.
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