Dealer cuts may hurt domestic car sales

Chrysler’s dealer closings and planned cuts by General Motors will cause domestic automakers to lose sales to foreign rivals, affected dealers say.

After the closings there will be 80 fewer domestic dealers than import dealers in Maryland, according to figures by R.L. Polk & Co. provided by Jack Fitzgerald, co-chairman of the newly formed Committee to Restore Dealer Rights.

There will be 45 foreign-car sale-and-service outlets on the Rockville Pike corridor from the D.C. line to Gaithersburg, compared with seven domestic counterparts, he said.

“It’s like surrender. Are they waving the white flag?” said Mr. Fitzgerald, 73.

In Virginia, domestic retailers will maintain a slight edge over import dealers, but nothing like the big lead they used to have.

Mr. Fitzgerald owns 11area dealerships, and will have lost three Chrysler and two GM franchises when the cutbacks are finished.

Before Chrysler’s dealer terminations there were eight states where import dealers outnumbered domestic dealers. When GM completes its franchise reductions, import dealers will have the lead in 16 states, according to R.L. Polk data.

The carmakers dispute that sales will be hurt, however, and many industry analysts agree that dealer reductions are necessary.

Chrysler spokeswoman Kathy Graham said the average customer still will need to drive fewer than 11 miles to find a dealer in rural areas, and 5 miles in metropolitan areas.

The automakers are broadening their arguments for making the cuts, perhaps in response to growing political pressure on Capitol Hill.

Mr. Fitzgerald was instrumental in drafting, and finding House sponsors for, legislation to reverse the franchise closings.

The House bill quickly gained 175 bipartisan co-sponsors, Mr. Fitzgerald said, and Sen. Charles E. Grassley, Iowa Republican, introduced a Senate version last week.

GM Chief Executive Officer Frederick “Fritz” A. Henderson, facing a skeptical House panel 10 days ago, said the 1,350 dealer closings planned by the end of next year will save the company $2 billion, or $1,000 per car, a figure not widely publicized before.

Chrysler Deputy CEO Jim Press told the same House Energy and Commerce Committee oversight panel that the company could save $1.5 billion - the cost of vehicles not sold by dealers who fail to meet minimum sales goals.

Mr. Fitzgerald has said that he and many other dealers are not underperformers.

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