Dealers losing franchises play ‘Let’s make a deal’

By Alex Gary

BusinessRockford.com

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ROCKFORD — Gary Dixon’s father bought Belvidere Motors on April 1, 1969, back when the dealership was selling the Chrysler and Plymouth brands. In 2001, it switched to selling the Dodge brand.

Today, though, Belvidere Motors is one of 789 dealers in the United States working through its final day as a Chrysler LLC franchise, after a bankruptcy court judge allowed the automaker to terminate the franchise agreements of about 25 percent of its dealers effective Tuesday.

Local terminations also included Strandquist Motor Co. in Rockford, a downtown Rockford staple since the 1940s, which is losing its Chrysler franchise, and Lou Bachrodt Auto Mall, which is having its Jeep brand taken away.

For Bachrodt, it’s a significant but not business-altering change. The area’s second-largest new-car dealer still will sell Chevrolet, BMW and Volkswagen from its dealership near CherryVale Mall.

For Belvidere Motors and Strandquist, it means the evolution from a new-car dealer that sold trade-ins to used-car lots, buying cars from auto auctions.

For Dixon, the past couple of weeks have been busy swinging deals to move as many Dodges as possible. Chrysler says dealers can sell the vehicles after today, but they won’t be able to offer Chrysler sales incentives, making it tough for them to compete.

“Last I looked, we’ve gotten rid of most of them,” Dixon said. “We’re under 40 on the lot. I’m down to losing money on the deals. It’s not drastic, though.”

Dixon said the response from past customers has been gratifying.

“A lot of people are coming in to buy one more car from us. They know we didn’t get the best deal from Chrysler,” he said.

Chrysler maintains that the franchises singled out for termination were chosen because they either weren’t profitable, didn’t house the automaker’s three brands under one roof or were too close to another Chrysler dealer.

The dealers argued in court that a smaller dealer base won’t save the company much money.

They say the dealers cover their own costs, paying for everything from the vehicles on their lots to employees, advertising and tools.

Dean Zimmerman, general manager of Strandquist Motor Co. said his company was down to 11 new Chrysler offerings as of Monday morning.

“We’ve got people all over the lot. The last week really has been crazy,” Zimmerman said.

He said continuing on as a used-car dealership shouldn’t be that difficult.

“The learning curve will be where we have to figure out what sells in this market, both car-wise and pricewise.”

Neither Dixon nor Zimmerman put much stock in the appeals of three Indiana pension funds, which argued that Chrysler’s proposal to create a new company under the control of Italian car company Fiat Group SpA to the U.S. Supreme Court was unconstitutional.

But Zimmerman, at least, held out a little hope.

“The longer it sits and isn’t rubber-stamped, maybe the better chance we have of seeing some changes,” he said.

Still, today’s late-afternoon decision by Supreme Court Justice Ruth Bader Ginsburg to delay the sale of Chrysler’s assets to Fiat won’t affect the dealers who stand to lose their franchises Tuesday.

“The reality is even if they allowed us to keep the franchise, we’re down to six or eight cars and the plants aren’t producing any vehicles right now,” Zimmerman said.

Assistant Business Editor Alex Gary may be reached at agary@rrstar.com or at 815-987-1339.