Published: May 14, 2009 11:05 pm      

Donato & Son's axed by Chrysler

Logansport dealer is among 20 in Indiana that will be closed

Operating in Logansport since 1959, the family-owned and operated Donato & Son’s Motors Inc. is considered one of state’s oldest and largest Jeep dealerships.

Donato’s 50th year will also be its last. It was informed Thursday it will not be a part of the restructured Chrysler-Fiat company.

The local dealer is among 20 Indiana dealerships that received a letter officially ending its relationship with Chrysler.

Although no one from Donato & Son’s Motors made a public comment, other colleagues did.

“I feel relieved we are going to be able to stay open, but I feel bad for the ones who were not on that list and will close,” said Greg Thompson, general manager of Wabash Valley Chrysler Dodge and Jeep in Wabash. “It’s sad they are not going to be a part of the new company. There are lives and years dedicated to the business. You can’t help but to feel Chrysler yanked the rug from beneath them.

“I think Chrysler didn’t respond soon enough when changes were happening with declining car sales and they had to do something like this. Hindsight, like they say, is 20/20.”

Other dealerships in the Logansport and the area — Mike Anderson Chrysler Dodge, Bob Schwartz Chrysler, Braun Chrysler Dodge Jeep, Bob Schwartz Chrysler Dodge Jeep and Hendrickson Chrysler Dodge Jeep — will remain open.

Chrysler, which declared bankruptcy April 30, decided to slash 789 of its 3,188 dealerships and the dealers were notified through United Parcel Service letters. Those dealerships will close by June 9.

However, they have until May 26 to file objections to the decision with U.S. Bankruptcy Judge Arthur Gonzalez.

Eliminating 789 dealerships means more than 40,000 jobs will be lost — a figure larger than Chrysler’s total U.S. work force.

A statement from the U.S. Treasury Department said less than a month ago Chrysler “faced the real prospect of liquidation, which would have eliminated all 3,188 of the company’s dealers.

“As a result of the successful Chrysler-Fiat partnership and the backing of the President’s Auto Task Force, Chrysler is now positioned to move forward with a plan that retains 75 percent of its dealers representing 87 percent of Chrysler’s sales. ... The Task Force played no role in deciding which dealers, or how many dealers,” were part of Chrysler’s decision on which dealerships were terminated.

This reduction isn’t Chrysler’s first separation from its dealers.

From 2001 through April, Chrysler reduced its dealership numbers from 4,320.

In the bankruptcy court filing, Peter Grady, Chrysler’s director of dealer operations, said a little more than 50 percent of the dealers make almost 90 percent of the U.S. sales.

Chrysler executives said the company is trying to preserve its best-performing dealers. More than half the dealerships being eliminated sell fewer than 100 vehicles per year.

In addition, terminating the dealership allows Chrysler to focus on its Project Genesis. The project wants more dealers consolidating Chrysler’s three brands under one roof.

Hindsight may be 20/20, but so is Aaron Arriaga’s foresight.

Earlier this week, the Button Chrysler-Jeep and Dodge new-sales manager said he felt safe about remaining with the new Chrysler because they sold all three brands, and by sales volume, they are Indiana’s top Chrysler dealership.

Although they didn’t receive a termination letter, Arriaga said the horizon isn’t crystal clear yet.

“In 30 days, GMAC (Chrysler’s new financing arm) will have a stress test for the remaining dealerships,” said Arriaga. “They will want to see if a dealership’s flooring plan is viable and if [dealers] can afford it.”

He said when dealers have cars on their lots, they pay interest on the vehicles until they are sold.

The longer vehicles remain unsold, the more dealers pay.

Plus, Arriaga adds, the dealer will have to have credit to borrow money to purchase cars from the new Chrysler.

All of that, he said, is part of the stress test and “it’s going to be really hard for some dealerships to pass that test.

“We look forward and we are excited to being a part of the new Chrysler. I feel bad for the people in the front office who are losing jobs and had no control over sales. ...

“This was just the first round. The second round will be the stress tests. I feel very fortunate to be here. Every day, I thank God that things are going our way.”

K.O. Jackson is the business writer at the Kokomo Tribune. He can be reached at (765) 854-6739 or via e-mail kirven.jackson@kokomotribune.com