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They’ve already achieved closure

Chrysler and GM might spare dealerships, but many have moved on

By Erin Ailworth
Globe Staff / December 5, 2009

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The decision by Chrysler LLC and General Motors Co. to reconsider closing thousands of dealerships nationwide may be too late to save auto dealers who are in the process of shutting down or have done so.

“For a lot of dealerships, the train has left the station. They’ve already engaged in some sort of shutdown or wind-down process,’’ said Robert O’Koniewski, the Massachusetts State Automobile Dealers Association’s executive vice president.

One example is Frost Motors Inc. in Newton, a Cadillac dealership that will close Dec. 21.

“We were delivered the wind-down letter in June,’’ said owner Tom Keery, one of at least a dozen Massachusetts dealers who were notified by GM that they’d be dropped from the company’s network. “We’ve entered into a long-term lease for the facility with a pharmacy. So, the news of that [reconsideration] is a little late.’’

Ray Ciccolo said he asked General Motors to look at its decision to shut down his one-year-old Saab dealership in Norwood. He called the dealership’s appearance on the cut list “a mistake.’’

“The criteria was that you had to have sold 50 Saabs in a calendar year. But I had just bought the dealership, and I sold 40 cars in the last three months of the year,’’ said Ciccolo, owner of seven dealerships in Greater Boston. “We’ve already notified them that the criteria they used was faulty.’’

Chrysler and GM filed for bankruptcy protection this spring, saying they planned to shutter thousands of dealerships as the companies restructured in an effort to regain ground lost to foreign automakers. Both posted November sales that dropped from the same month last year - 2 percent for GM and 25 percent for Chrysler.

Even so, the automakers said earlier this week that they would reexamine roughly 2,000 dealerships on their cuts lists, conduct face-to-face reviews with auto dealers, and could reinstate some businesses or offer binding arbitration if Congress rejects a bill before the House of Representatives that would require all dealers to be reinstated. That legislation is being pushed in part by the National Automobile Dealers Association.

The national dealers group issued statements saying the reinstatement plans represented progress but questioning whether they will go far enough.

“GM’s announced plan to address the issue of dealership closings is a positive step, but we do not believe it establishes a sufficiently meaningful process that provides for a reasonable opportunity for dealer reinstatement,’’ the association said.

GM spokeswoman Ryndee Carney said it was too early to estimate how many dealerships might be saved. The review process is slated to begin in mid-January. “We think some of these [examinations] will likely result in some of the dealers being reinstated,’’ Carney said, adding that of the 1,300 dealerships that were to be dropped, about 300 have closed.

Chrysler began its review process Thursday. The 789 dealerships dropped by the company stopped selling Jeep, Dodge, and Chrysler products in June, said spokeswoman Kathy Graham. About 80 percent of those dealers are still in business through other auto manufacturers, as used car dealers, or as auto service centers.

One such dealer is South Shore Chrysler in Braintree, now South Shore Autolines, a used car dealership, service center, and body shop. “We’re staying open. We felt that we never should have been closed in the first place,’’ said Greg Shea, who runs the business with his brother, Michael. “We had to lay off some employees to stay profitable, but we are staying in business.’’

Shea said he wasn’t sure what Chrysler’s plans meant for his business, but said he didn’t have a lot of confidence in the automaker. He said he’d rather see Congress pass the bill calling for all dealers to be reinstated.

“I think that’s really the only option,’’ he said.

Erin Ailworth can be reached at eailworth@globe.com.