Letter from a Dodge dealer

[snopes]

Comment: Here is the email I received. Is it true? Thanks.


Letter from a Dodge Dealer
The Coming Depression
Wednesday, May 20, 2009
letter to the editor

My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu,
a family owned and operated business in Melbourne, Florida. My family
bought and paid for this automobile franchise 35 years ago in 1974. I am
the second generation to manage this business.

We currently employ 50+ people and before the economic slowdown we
employed over 70 local people. We are active in the community and the
local chamber of commerce. We deal with several dozen local vendors on a
day to day basis and many more during a month. All depend on our business
for part of their livelihood. We are financially strong with great respect
in the market place and community. We have strong local presence and
stability.

I work every day the store is open, nine to ten hours a day. I know most
of our customers and all our employees. Sunshine Dodge is my life.

On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we
purchased, will be taken away from my family on June 9, 2009 without
compensation and given to another dealer at no cost to them. My new
vehicle inventory consists of 125 vehicles with a financed balance of 3
million dollars. This inventory becomes impossible to sell with no factory
incentives beyond June 9, 2009. Without the Dodge franchise we can no
longer sell a new Dodge as "new," nor will we be able to do any warranty
service work. Additionally, my Dodge parts inventory, (approximately
$300,000.) is virtually worthless without the ability to perform warranty
service. There is no offer from Chrysler to buy back the vehicles or parts
inventory.

Our facility was recently totally renovated at Chrysler's insistence,
incurring a multi-million dollar debt in the form of a mortgage at Sun
Trust Bank.

HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?
THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY

This is beyond imagination! My business is being stolen from me through NO
FAULT OF OUR OWN. We did NOTHING wrong.

This atrocity will most likely force my family into bankruptcy. This will
also cause our 50+ employees to be unemployed. How will they provide for
their families? This is a total economic disaster.

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

I beseech your help, and look forward to your reply. Thank you.

Sincerely,
George C. Joseph
President & Owner
Sunshine Dodge-Isuzu

Here are the people losing their jobs, including Mr. Joseph,
http://www.sunshinedodgeisuzu.com/staff.html

[Wild Redhead]

Originally Posted by snopes

Comment: Here is the email I received. Is it true? Thanks.


Letter from a Dodge Dealer
The Coming Depression
Wednesday, May 20, 2009
letter to the editor

HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?
THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY

Not any more.

[Eddylizard]

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

Possibly the "free market economy" part of that sentence answers that question.

[Ana Ng]

I'm looking to swap my Beetle in for something easier to fix when necessary, and driving by a dealership tonight I saw a similar shrill sign painted on the side of a truck that said "Thanks to the government, we are forced to liquidate our inventory of 150 Jeeps in the next two months..."

[AnglRdr]

Originally Posted by Wild Redhead

Not any more.

Chrysler is not a government entity.

Originally Posted by Ana Ng

I'm looking to swap my Beetle in for something easier to fix when necessary, and driving by a dealership tonight I saw a similar shrill sign painted on the side of a truck that said "Thanks to the government, we are forced to liquidate our inventory of 150 Jeeps in the next two months..."

Thanks to the government, the dealership is still in business and has 2 more months to liquidate the vehicles, rather than having to have done so several months ago.

[Mateus]

Well, Sunshine Dodge is on the list of closing dealerships, and it lists Mr. Joseph as the dealership owner. I used the contact link on the dealership website to ask if the letter is attributed correctly.

[snopes]

Originally Posted by AnglRdr

Chrysler is not a government entity.

It's getting there:

"Current plans call for the U.S. government to emerge with an 8% stake in a post-bankruptcy Chrysler and a 55% share of a reformulated GM."

http://online.wsj.com/article/SB124285476839840701.html

[AnglRdr]

Originally Posted by snopes

It's getting there:

"Current plans call for the U.S. government to emerge with an 8% stake in a post-bankruptcy Chrysler and a 55% share of a reformulated GM."

http://online.wsj.com/article/SB124285476839840701.html

True, but those who run Chrysler and GM will not be government employees. As far as I know, they won't be brought under the Department of Transportation umbrella.

Fact is, they are no more government entities than AIG is.

[Silas Sparkhammer]

Maybe they'd like to see "private" debtors' prisons brought back, rather than "government" bankruptcy protection.

I'll also bet you a pickle that this nice ex-used-car-salesman accepts wicked tainted polluted "government" unemployment benefits while he looks for another job.

Silas

[Starla]

I don't understand why these franchises are getting shut down. If the franchise is responsible for the cost of the vehicles on their lot, why does the parent corporation care if they stay open or close? Why can't Mr Joseph decide wether or not to close?

What am I missing?

[AnglRdr]

Originally Posted by Starla

I don't understand why these franchises are getting shut down. If the franchise is responsible for the cost of the vehicles on their lot, why does the parent corporation care if they stay open or close? Why can't Mr Joseph decide wether or not to close?

What am I missing?

They likely can stay open; they just won't be franchisees anymore.

[Linnea]

Originally Posted by Starla

I don't understand why these franchises are getting shut down.

Why is Chrysler closing 789 car dealerships?

Chrysler disclosed in a bankruptcy filing last week that it plans to close 789 dealerships—about one-quarter of its total. General Motors, meanwhile, told the owners of 1,100 dealerships that it will drop them from its network. How does shuttering dealerships help car companies?

[Starla]

Thanks for the link, Linnea. Now it makes a lot more sense.

[Natalie]

Originally Posted by snopes

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

It's not a free market economy and hasn't been for some time, if ever.

[Ana Ng]

Originally Posted by AnglRdr

Thanks to the government, the dealership is still in business and has 2 more months to liquidate the vehicles, rather than having to have done so several months ago.

You don't have to tell me that, I ranted about it the whole way home.

[jimmy101_again]

Originally Posted by Natalie

It's not a free market economy and hasn't been for some time, if ever.

How so?

The dealership is a franchisee of the auto maker. If the auto maker believes they can do better by discontinuing some of the franchises than they have every right to do so (within whatever limits are spelled out in the franchise contracts). Just as the auto maker can refuse to grant a new franchise near an existing franchise.

It is a free market. Free for both the dealership and the auto maker. The dealership cannot force the auto maker to make bad business decisions just because it benefits the dealer.

(US car manufacturers really don't need much help in making bad business decisions.)

[AnglRdr]

Originally Posted by UJest

You're saying that if the government owns 55% of a corporate entity, that such entity is not a "government entity?"

Yes, that is what I am saying.

Has the definition of "affiliate" in the U.S. securities laws been rewritten without my knowledge?

I wasn't aware that you were consulted prior to changes in laws.

[Natalie]

Originally Posted by jimmy101_again

How so?

My comment was a more general statement about the US economy - it's not a completely free market. I took the OP's statement to be referring to the US economy as a whole.

[lyra_silvertongue]

From the Slate article linked above:

When the auto industry first started expanding in the early 20th century, it made sense to have dealerships in every community. Much of the population was rural, and cars broke all the time, making proximity to the original vendor necessary. These days, with a more urban population and better auto engineering, it's not necessary to have so many dealerships. At the same time, people are willing to drive farther to buy or tune up their cars. As a result, more dealerships don't correlate with more sales. Toyota sells more cars than Chrysler with fewer than one-third of the number of franchises. (The average Toyota dealer sold 1,589 vehicles in 2008; the average Chrysler dealer sold 124.)

I've often wondered how it's possible for there to be so much saturation with car dealerships. I can easily think of almost ten dealerships nearby and our town's population is less than 15k. There also usually tends to be one or two dealerships in a lot of the smaller towns around here, of which there are many. It seems that the costs of maintaining a dealership, as well as the amount of money that needs to be invested in inventory, would be pretty high. And then a Chrysler dealership sells what, a car every three days? Maybe this has been a business model that hasn't made sense for a long time. I can definitely understand how awful it must be for some of the dealers, like the one in the OP, to suddenly have everything pulled out from under them. However, isn't this actually an example of what a free market economy does? Something is not profitable so it is eliminated - the free market economy doesn't care if the business has been in your family for 50 years, or if you have kids to feed, or if you've worked 9 hours a day every day for 30 years. I agree that the situation is all kinds of effed up for those personally affected, but to just simply blame it on "the government" seems so childish.

[Recklessmess]

Originally Posted by UJest

I'm not consulted, but most of my colleagues and industry groups that I work with on a daily basis would know about such a change since we are securities lawyers.

So you guys are the ones responsible for all the mess, eh?

Nope, I just checked. An affiliate is a person or entity controlling, controlled by or under common control with another person or entity.

Sorry, but you're incorrect in your assessment.

The government isn't so much a controlling entity as it is a creditor, to which it can create conditions to which it loans out its money.