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Thursday, May 14, 2009

Chrysler Closing Seven Dealers in South Dakota

I knew I didn't like the sound of this report about Chrysler's move to close almost 1 in 4 of its dealerships:

"In addition, as suburbs grew and the modern interstate system continued to evolve, longstanding dealerships no longer were in the best or growing locations," the company said in its filing. "Many rural locations also served a diminishing population of potential consumers. Some dealership facilities became outdated. Other locations faced declining traffic count and declining populations" [Tom Krisher and Dan Strumpf, "Chrysler Moves to Eliminate 789 of 3200 Dealers," AP via Yahoo News, 2009.05.14].

Rural locations—uh oh, that's us! Huffington Post gets the list. Here's who's on the chopping block in South Dakota:
The White Buffalo dodges the bullet... but seven South Dakota businesses take the hit. Ouch. But note that some of these dealers, like Liberty, carry other brands, so they may just be down but not out. Let's hope so... and order more Fords and Beetles!

For comparison: Chrysler wants to close 8 dealers in North Dakota, 19 in Minnesota (including Scholtes Motors in Worthington, in business since 1932), 22 in Iowa, 8 in Nebraska.

2009.05.15 09:00 CDT: GM will announce the closing of 1,100 dealerships today, part of a plan to cut over 2,600 dealers by next year. GM plans to notify dealers directly and leave it to the dealers to decide how to announce the news themselves.


  1. Meanwhile, my Chrysler dealer, Billion, keeps getting bigger, and bigger, and bigger.

    Todd Epp
    SD Watch http://www.southdakotawatch.net

  2. Is there any way, we as a community, can rally General Motors to spare our local dealer from the potential cuts? Prostrollo's is a valuable asset and the GM Franchise is a huge part of that value.

    The market is changing and while Prostrollo's has always prided themselves on being "All-American", the day may come soon when a foreign based franchise such as Toyota or Honda makes sense for our Madison dealer.

  3. A Prostrollo cut is unlikely, but there's really no such thing as "all American" when it comes to cars. Parts come from everywhere. My Chevy is a Suzuki and with Chrysler we'll soon be driving Fiats. It's crazy how quickly the whole thing went up in smoke.

  4. No doubt, John: "all-American" is a sham. And what about Volkswagen, Rod? Don't forget: Beetle Days!!!

  5. Don't worry Rod, Keloland puts Billion in the headline, but notes that they checked with Prostrollo's and they are safe from closures (http://keloland.com/NewsDetail6162.cfm?Id=84696)

    Of course, the best thing you can do to keep your local dealership (and local jobs) is to keep doing business with them.

  6. Why are they cutting 25 percent of their dealerships? That's such an arbitrary number. Round numbers aren't always the magic numbers.

    Also Cory, your headline isn't exactly accurate. Chrysler is ending its franchise agreement with these dealerships. I wouldn't doubt if some stay open selling used cars, or have other franchise agreements for other new car lines. So not all are necessarily closing.

  7. True, Steve! I think the response from the dealers has uniformly been to vow to stay open. But Chrysler wants to see them closed. Whatever the number, they want to get rid of the old showrooms that don't look as snappy as the newer dealerships that Toyota, Honda, et al. generally have (since they haven't been here as long). Chrysler (and GM) also want to weed out some dealers so there's less in-house competition. The fewer Chrysler dealers I can drive to within a 50-mile radius, the less leverage I have to dicker, and the more money Chrysler makes per sale. Hmmm... perhaps we should be worried about a strategy that just seeks to charge more per car rather than improve the quality of each car and thus sell more.

  8. GM and Chrysler want only dealers which are "too big to fail". Guess who ends up holding the bag when those dealers get into a bind.

    I don't know much about the car business, but don't quite see how any local dealership adds costs to the car companies.

    The smaller bunch of dealers GM wants to dump sell only about 15,000 new vehicles per year. That "only amount" probably generates enough revenue to GM to pay one or two of their grossly overpaid executives or their golden parachutes.

    GM and Chrysler are starting cuts at the wrong end of the muddled distribution chain.


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