Despite bankruptcy, Chrysler dealerships optimistic

BY CLAUDIA CRUZ

Wednesday, May 6, 2009 3:27 PM EDT

At the Star Chrysler Jeep Dodge dealership in Queens Village, the recent bankruptcy filing of Chrysler ruffled few feathers.

“We are very optimistic about the near future,” said Pete Zacharia, the general manager at Star Chrysler. “It’s going to effect in a positive way.”

On Thursday, April 30 after negotiations with the United Auto Workers were reached but collapsed between the company and creditors, Chrysler filed for Chapter 11 bankruptcy protection, giving the automaker an opportunity to restructure, reduce its liability and expedite the acquisition by Fiat, an Italian car manufacturer. Still, as the news rippled through airwaves, dealers and consumers stood on guard waiting to see how it might affect them.

“We may not get paid for some money that is owed to us, but we are a larger dealer. The smaller dealerships may not be able to wait till after bankruptcy to get paid,” said Bruce Bendel, president of Major Chrysler Jeep Dodge. “Chrysler has competitive brands. We think we can survive and come out stronger on the other side.”

According to the Chrysler press release announcing the restructuring, the new company will continue to produce and support vehicles under the Chrysler brand and parts under the Mopar brand. Current employees will become employees of the new company, financing will be handled by GMAC, warranties will be backed by the federal government and dealerships will remain open for business.

But under bankruptcy, Chrysler could cancel franchise agreements with its dealers. At Starr Chrysler, Zacharia said that “they are not worried” that Chrysler would cancel their franchise agreement. And though Zacharia would not release any sales figures for Star Chrysler, in their showroom at 211-34 Jamaica Avenue hangs an April 2008 letter from Bob Nardielli, Chrysler CEO, thanking Star Chrysler for helping Chrysler increase sales in December 2007 “in spite of a flat market,” a possible sign of the future value of the dealership to the new company.

The lack of lending by banks does worry Zacharia, however. “When the banks start lending, then everything will be fine,” he said.

In news reports James Arrigo, co-chairman of Chrysler’s National Dealer Counsel, stated that consumers questioned the future of the company and, if they purchased a car, whether or not their cars would be serviced.

Bendel, who also runs Major Auto, said that the large dealerships will be able to stock Chrysler parts and, even if there is a slow down now, with the idling of the Chrysler plants for 30 to 60 days, “I don’t see it being a big problem.”

He does advise consumers to make sure that the dealers explain carefully the incentives and the financing because of the change from Chrysler to GMAC financing.

One consumer still considering purchasing a new car, Cesar Nascimiento, said that he always wanted a Jeep Wrangler.

“They have zero percent interest and they have rebates on the cars and everything,” said the resident of Jamaica outside of the Star Chrysler showroom. He hopes to spend under $30,000. “I don’t need a new car but I am looking for a bargain. Money isn’t easy to come by these days.”

THE QUEENS COURIER/Photos by Claudia Cruz
Despite the recent announcement of Chrysler’s Chapter 11 bankruptcy, Star Chrysler Jeep Dodge in Queens Village feels positive about the dealerships outlook.