The Free Press, Mankato, MN

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    Chrysler gone

May 14, 2009

Chrysler axes Le Center dealer

Only dealer in region dropped by automaker

By Tim Krohn

LE CENTER — Gary Factor saw a sad irony in it.

“A few years ago Chrysler gave us a plaque for being their dealer for 75 years. Now they gave us this letter.”

The letter told Factor he would no longer be a Chrysler dealer.

But Factor Motors of Le Center won’t be gone — it will continue to sell the Ford line.

Factor’s was the only Chrysler dealer in the greater Mankato area axed as Chrysler Corp. moved Thursday to close 789 — one-quarter — of its dealerships.

Across Minnesota, 19 dealerships got letters from the company telling them Chrysler planned to end their franchise agreement. The dealers are expected to shut down by mid-June with their inventory going to other dealers.

Factor is the second generation to own the dealership, and his son works with him. The elder Factor said the letter wasn’t a big surprise: “They’ve been trying to get rid of small dealers for 20 years and now they can because they are in bankruptcy. Under the Minnesota franchise laws they can’t take your franchise away easily, but when they’re in bankruptcy, the laws don’t apply.”

He said the loss stung even more because six months ago he had arranged to sell his Chrysler franchise to another larger Chrysler dealer — a sale Chrysler denied. “So now we get zero instead of a very substantial amount of money. That really stung.”

But, Factor said, their dealership has a strong Ford line, particularly the pickups, which sell well in the rural areas.

“You just hunker down and work harder, I guess,”

Mark Nibbe, sales manager at Lager’s Chrysler in Mankato, said the surviving dealerships and a restructured Chrysler should emerge very strong.

“It’s bad news for some, obviously, but we’re really excited. We expect to see a lot of good things come out of this,” Nibbe said.

Kip Lager owns both the Mankato dealership and Lager’s in St. Peter. Both are ahead of their sales projections for the year, Nibbe said.

“We’ve had a very good quarter considering the economy. The local area has been good for us because they’ve been so loyal.”

Nibbe said the new Chrysler Corp. that emerges from bankruptcy protection and restructuring will be leaner and the remaining dealers stronger.

He said that besides dealerships closed by Chrysler, other struggling dealerships may go out of business. That’s because Chrysler is ending its financing arm that helps dealers with cash flow to keep their inventory. “Those dealerships that are weak might have trouble finding financing somewhere else,” Nibbe said.

The largest number of dealer closings are in Florida, California and Texas.

Chrysler, which filed for bankruptcy protection two weeks ago, has 3,200 dealers.

Some dealerships on the closing list could be saved by rulings from Chrysler’s bankruptcy judge or if other dealers decide to sell their franchises.

Chrysler said it needed to eliminate dealerships so that it can be viable in the future and the remaining dealers can be more profitable.

Today 1,000 to 1,200 General Motors dealers are expected to receive notices that they are being cut. Their franchises will expire in October 2010, G.M. spokeswoman Susan Garontakos told The New York Times.

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