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Chrysler cuts 2 local dealers loose, with a 3rd set to benefit
By Jeff McDonald / The Bulletin
Published: May 15. 2009 4:00AM PST
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Chrysler’s dealership downsizing swept through Central Oregon on Thursday, when two of the area’s three Chrysler dealers learned they were losing their business relationship with the Detroit-based automaker.
Thomas Sales & Service Chrysler Dodge of Bend and Dave Hamilton Chevrolet-Jeep of Redmond both plan to stay in business, but are two of the 789 dealerships across the nation that will lose their Chrysler franchise June 9 as part of the company’s efforts to rise out of Chapter 11 bankruptcy, according to a list the company released Thursday.
The third Chrysler dealer in the region, Jim Smolich Motors of Bend, is expected to get the two dealers’ Chrysler business as the company consolidates dealerships, according to Smolich’s general manager.
TS&S, which has been in business since 1937 and carries Chrysler’s Dodge lines as well as the Subaru brand, plans to appeal Chrysler’s decision, said Matt Thomas, co-owner of the company with his brother, Bill Thomas.
“The bottom line is there is an appeals process,” Thomas said. “They are trying to do things in Detroit that don’t mesh well with different markets, and they don’t know what we have done here the last (72) years.”
The company, which has 55 employees, will continue to sell Chrysler vehicles and do warranty work as it appeals Chrysler’s decision, Thomas said.
A representative for Dave Hamilton, which has been in business in Redmond since 1974, said the appeals process would be a waste of time and money.
The Redmond auto dealer could get even worse news today when General Motors Corp. is expected to announce more than 1,000 dealer cuts around the country as it tries to stave off bankruptcy.
“We could very well be one of them,” said Ricky Suganuma, the general manager of Dave Hamilton Chevrolet-Jeep.
The biggest hurt for Dave Hamilton from Thursday’s announcement could be getting stuck with new Jeep vehicles, parts and tools, Suganuma said.
The company had stopped ordering new cars when it saw Chrysler heading for bankruptcy, but it still has inventory and equipment valued at approximately $434,000, he said.
The company, which has 30 employees, plans to stay in business and maintain its existing number of employees regardless of how today’s announcement turns out, and it will focus on service and used-car sales, Suganuma said.
“This will give us an opportunity to put all of our means and focus on used cars,” Suganuma said. “The biggest adjustment we are going to have to make is in the service department.”
Dave Hamilton services between 200 and 300 Chrysler vehicles under warranty per month, which will likely go to Smolich, Suganuma said. The company will finish current repairs for customers but will not take any new jobs, Suganuma said.
“Pretty much Smolich won the lottery this morning,” he said Thursday, noting that Smolich will likely pick up the Dodge and Chrysler brands to complement its Jeep line made by Chrysler. “We were probably on the top of the list right off the bat and we are a single-(brand) dealership. Chrysler’s goal is to have all its franchises under one roof. Obviously, I’m not happy because we are losing.”
Smolich will likely benefit from Chrysler’s decision — pending the outcome of TS&S’ appeal — because it would become the sole Chrysler dealer in Central Oregon providing both Chrysler vehicles and service, said John Younger, general manager of the Bend dealership.
“If the plan works out, we are going to acquire the Dodge and (Chrysler) franchises and be the only Chrysler dealer in Central Oregon,” Younger said. “It is the factory’s way of saying that we’re the preferred dealership.”
While Chrysler’s decision might be good for Smolich, it won’t be good for the community because TS&S and Hamilton, both family-owned dealerships, have deep ties in Central Oregon, Younger said.
Hamilton and TS&S are among six dealerships in Oregon that Chrysler seeks to drop, according to an Associated Press report. In Washington, 15 are on the list, AP said.
Central Oregon customers with Chrysler vehicles under warranty are already able to bring them to any certified Chrysler dealer, including Smolich. Chrysler had planned to consolidate its different brands under one roof for the past several years, and its April 30 Chapter 11 bankruptcy filing gave it the opportunity it needed to do so, Younger said.
“We all knew the date was on the calendar, but nobody knew who was going to be on the list,” he said.
Smolich has the capacity to handle the extra load because sales have been down 40 percent the last two years, Younger said.
GM, which is preparing for a 40 percent cut in its dealer network by the end of 2010, will send letters to more than 1,000 auto dealers today that it will not renew their franchises.
The company’s local network was already reduced in February when Murray & Holt Motors Inc., a Bend Pontiac, GMC and Buick used- and new-car dealership founded in 1957, cut its ties because it could not receive dealer financing. The company converted its operations to used-car sales and service.
In Central Oregon, the other GM dealers are Dave Hamilton in Redmond, Gary Gruner Chevrolet-Buick-Pontiac in Madras and Bob Thomas Chevrolet-Cadillac-Honda in Bend.
Jeff McDonald can be reached at 541-383-0323 or at jmcdonald@bendbulletin.com.
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