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Chrysler Dealers: Company 'Begged' Us to Take Too Many Cars

UPDATED below with testimony from other dealers at 11:27 a.m.

Chrysler dealers who would be forced to shutter their shops took the stand in bankruptcy court this morning, the third day of hearings to decide whether Chrysler can sell itself to Fiat, The Post's Tomoeh Murakami Tse reports from New York.

One after another, the dealers testified that they had received numerous top sales awards from Chrysler and took on unnecessary inventory in recent months as executives from the automaker "begged" them help improve cash flow by purchasing more cars.

Recalling a conversation he had with Chrysler president Jim Press, Robert Archer, a dealer based in Texas, said he was told that Chrysler would go "belly up" unless the dealers purchased more cars.

"Fiat will think we're not a viable company, and they'll back out. We need your help," Archer recalled Press as saying, adding that he believed there could be retaliation if he did not.

"Anyone who doesn't purchase more cars ... we have very long memories," Archer said that Press told him.

Chrysler earlier this month announced that it would terminate agreements with 789 dealers -- roughly a quarter of the company's dealerships -- as Chrysler seeks to improve sales efficiency and bring all three of its brands under one roof.

Archer said he had two dealerships across the street from each other, and that he had recently received approval from Chrysler to merge the two, which would in fact bring all the brands together.

UPDATE:

Richard Mealey, who runs a dealership in Troy, Mich., that has been in his family for more than 40 years, said that he and his 89 employees had achieved the Chrysler Pacesetter Club -- a distinction that is given by Chrysler to the top 100 dealers by sales volume -- for 28 years.

His dealership, Mealey said, was also recognized as a "Mopar Master" -- given to dealers that buy a great deal of auto parts -- every year for the past decade. His dealership has also been in the Five-Star Elite Club, awarded to those with high customer satisfaction.

The most recent congratulatory letter came April 7, he said, recognizing his dealership for selling 103 cars in March. His dealership achieved well beyond the minimum sales responsibility required, he said.

"We have always been a team player. I never received any indication that I was not stepping up and doing my part," he said. "I don't think I cost Chrysler any money. I think I'm one of the largest profit contributors. I pay for all my expenses."

When asked by his attorney, Stephen Lerner, whether he had the option of continuing on as a used car dealership, Mealy said the city of Troy does not allow independent used car dealerships, meaning ones that do not also sell new cars. Mealy does not have all three Chrysler product lines.

Colleen McDonald has two Chrysler dealerships in suburban Detroit (and one GM). She took over the dealerships from her father and earlier this month was told by GM and Chrysler to close all three of her dealerships. Neither of her Chrysler dealerships carries all three Chrysler lines. (You can listen to an interview she gave to a Detroit radio station here.)

"We usually rank between the top 50 to 100 dealers in the country," she said.

"I feel I'm not fitting into the plan because I'm a female," she said. Chrysler attorneys objected, but Judge Arthur Gonzalez overruled. "By all measures we fit into the Chrysler plan. ... I'm devastated. I feel like I've been raped and left for dead."

On cross-examination, a Chrysler attorney asked whether there are competing Chrysler dealerships nearby, to which she replied yes. She was also asked whether she had seen any internal data Chrysler evaluating her dealerships with others nearby. She responded no.

-- Frank Ahrens
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By Frank Ahrens  |  May 29, 2009; 11:27 AM ET
Categories:  The Ticker  | Tags: chrysler  
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