Two local Chrysler dealerships to close

Two Richmond-area Chrysler dealers are among 789 dealerships that will close next month as the bankrupt automaker seeks to streamline its sales and service force.

The remaking of the auto industry is expected to continue today when General Motors Corp. announces that about 1,100 GM dealers' franchise agreements will not be renewed.

Airport Chrysler Jeep on Laburnum Avenue in eastern Henrico County and Pearson Dodge on Midlothian Turnpike in Chesterfield County were told in overnight letters received yesterday that they had lost their Chrysler franchises and will have to shut down by June 10. In all, 26 Virginia dealers were given the news.

Chrysler Vice Chairman Jim Press called the cuts difficult but necessary. He said the list of dealers is final and there will be no appeal process. The average Chrysler store employs 43 people.

"This is a difficult day for us and not a day anybody can be prepared for," Press said.

The 3.5 million customers who purchased vehicles from the affected dealers will be notified about the closures, and their warranties will be honored, Chrysler said.

Frank Pearson, president of the Pearson automotive group, said he understands Chrysler's decisions.

"It's going to work out well for the dealers," he said.

Pearson has seven franchises, including a Chrysler Jeep Dodge store on West Broad Street near Parham Road in western Henrico that was not on Chrysler's list of 789.

It is a different story for the owners of Airport Chrysler Jeep. The dealership is the last store for the Lawrence automotive group, which sold Lawrence Dodge late last year. Mark Lawrence, general manager of the dealership, did not return calls yesterday.

Chrysler executives said the company is trying to preserve its best-performing dealers and eliminate ones with the weakest sales. More than half the dealerships being eliminated sell fewer than 100 vehicles per year and account for 14 percent of U.S. sales, they said.

The company also is trying to reduce the number of single-brand dealerships to bring all three Chrysler brands -- Jeep, Chrysler and Dodge -- under a single roof, they said. It also wanted to limit competing dealerships.

With the two dealers shut down, the Richmond area will be left with four Chrysler dealerships, with one family owning half of them.

Jimmy Whitten, co-owner of Whitten Brothers, said Chrysler officials asked him yesterday whether he would be interested in taking over the south-of-the-river Dodge franchise being stripped from Pearson. Whitten Brothers already owns a Chrysler Jeep dealership on Midlothian Turnpike and a Chrysler Jeep Dodge store in Ashland.

"There is no formal agreement yet, but I don't see anything that could stand in the way," he said.

Bringing the Dodge dealership to the Chrysler Jeep store on Midlothian Turnpike will boost sales 50 percent to 80 percent, he said. Plus it will make him the sole Chrysler dealer immediately north of Richmond and in Chesterfield.

Whitten said he had been contacted by some of Pearson's 50 Dodge employees about jobs.

Crossroads Chrysler Jeep Dodge in Prince George County is the fourth Chrysler dealer in the area.

What will become of the Pearson and Airport car lots is uncertain. They could sell used cars from the properties or try to land other new-car franchises to operate.

Chrysler has received $4 billion in federal loans and has been operating in bankruptcy protection since April 30. Its sales this year are down 46 percent compared with the first four months of last year, and it reported a $16.8 billion net loss for 2008.

Also yesterday, GM disclosed in a filing with the Securities and Exchange Commission that it likely would sell most of its assets to a new company and liquidate the rest if it has to seek bankruptcy protection.

It has said bankruptcy is possible if it doesn't get enough takers on an offer to swap $27 billion in bond debt for stock.

GM has said it will notify about 1,100 dealers today that their franchise agreements will not be renewed in September 2010. It is not clear how many in the Richmond area and in Virginia will be cut, though industry observers say several dealers believe they are endangered.

The dramatic downsizing of Chrysler and GM will do more than hurt individual dealers and their employees.

"Dealers are usually the big entrepreneurs in a city, the big business owner," said George Hoffer, a professor of economics at Virginia Commonwealth University who specializes in the auto industry. "They're the ones that support the charities and are visible and part of the community."

Contact Louis Llovio at (804) 649-6348 or .