May 15, 2009 – Chrysler announced Thursday the closing of 789 dealerships across the country affecting all 50 states.  It will show the inevitable impact the automotive industry has on the U.S. economy, small businesses and the quality of life for millions of Americans.

In my home state of Michigan, 40 dealerships will close and 14 of them are located in the Detroit Metro area.  That’s devastating for a state with record unemployment; record job loss and one of the highest foreclose rates in the country.

Minority dealers will be hit hard by these closings.  The National Association of Minority Automobile Dealers fears that 140 of Chrysler’s 170 to 175 minority-owned dealerships could face being closed.  And the figure could almost double if General Motors follows up with closing an estimated 174 of the 300 minority-owned dealers.

All of this is the result of Chrysler’s Chapter 11 bankruptcy filing on April 30.  Folks were expecting cuts – but the severity of these stunned dealers, employees and automotive analysts.

Steven Landry, Chrysler Executive Vice President for Sales and Marketing, made the announcement and explained the decision during a conference call. “My stomach still has a wrench in it,” he said.

And the wrench in his stomach is considered mild when compared to the feelings of those dealers on the hit list.  Fred Brans, a sales consultant at Lochmoor Chrysler Jeep in Detroit, told The Detroit Free Press, “It’s like somebody took all the air out of your body.”

Pennsylvania and Texas will see more than 50 dealers close, with Ohio and Illinois closing 40 plus dealerships, leaving some 2,392 up and operating. 

Now it looks like General Motors (GM) may follow suit if the company takes the Chapter 11 route.  They also announced they would likely sell most of its assets to a new company or liquidate assets if they aren’t able to sell $27 billion in bond debt for stock. 

This could be a long road to recovery for the auto industry.

Has the troubled automotive industry impacted you or anyone you know? 

March 30, 2009 – American automakers are given another lease on life by President Obama but not for long.  Former auto giants General Motors and Chrysler were given a do or die ultimatum: Get new leadership, a financial survival plan and a new vision that outlines how the industry will go forward without additional federal dollars.

The president, flanked by his team at the White House announcement, said his administration will be more “hands-on” in the restructuring of the automakers and wants to see immediate changes.

“I am announcing that my administration will offer GM and Chrysler a limited period of time to work with creditors, unions and other stakeholders to fundamentally restructure in a way that would justify an investment of additional tax dollars; a period during which they must produce plans that would give the American people confidence in their long-term prospects for success,” the president said.

If the automakers want to avoid reorganizing under the dreaded bankruptcy law, this could be their last chance.   Both companies will get more short-term money from the feds to help with the restructure with some strings attached.

The task force that worked on a plan for the car manufacturers wants to see the companies move quickly; Chrysler will have 30 days to revise their plan and General Motors will have 60 days. Chrysler has been instructed to work out a partnership with the Italian auto maker Fiat.

A lot is riding on the success; just last week auto suppliers were given $5 billion from TARP money to keep their businesses afloat while awaiting the fate of the big three.

“These companies and this industry must ultimately stand on their own, not as wards of the state,” Obama sounding a warning the bailout money is nearing its end. 

Do you agree with Obama on how much help the auto industry should receive from the government?