Richards Loses Chrysler, Dodge, Jeep Franchises
Tough economic times hit home once again last week when Richards Auto Sales learned that its Chrysler, Dodge, Jeep dealership will be dropped by Chrysler as part of a bankruptcy reorganization plan that will likely go into effect on or before June 9, 2009. The closing of the longtime Chrysler dealership, in addition to being devastating to the Richards family, will also mean that after June 9 no new cars will now be sold in Fulton County - a sad commentary for a community that once boasted dealerships for all of the Big Three automakers. The Thomas Automotive Family closed its Ford-Mercury dealership in October 2008, just 14 months after closing its General Motors dealership here.
Richards Auto Sales will, however, remain open for now, selling used cars and doing repair work.
The closing of the new car dealership will mark the end of an era for the K.G. Richards family, which has operated a dealership since 1945. K.G. began the business in 1945 at the old Harris Garage then located on Lincoln Way West in Mc- Connellsburg. He sold only Dodge vehicles and opened as a satellite of Shively Motors in Chambersburg. He was allotted 10 percent of Shively's new Dodges at the time. "If they got 10 new Dodges, Dad got one," Dennis Richards said.
In 1957, Richards bought a franchise from Marl Garlock and began selling Chrysler, Plymouth and Dodge in addition to used cars at the current location. A Jeep franchise was later added in 1984. His son, Dennis, began working with him in 1971 and took over the business when his father retired. Denny's son, Kevin, started with the dealership in 1998.
Denny Richards told the "News" that he was "shocked" to learn of the closing last Thursday. Although he was very aware of Chrysler's impending bankruptcy and plans to close some dealerships, he felt that because Richards Auto Sales sold Chrysler, Dodge and Jeep, he would be insulated from the closings that seemed to target dealerships that offered only one of the models. Instead, Richards became the only dealership in the area to be closed. Hoffman in Hagerstown, Shively in Chambersburg, Price Motors in Cassville and Douglas Chrysler, Dodge & Jeep in Hancock, Md., all escaped the chopping block. Under the terms of Chrysler's bankruptcy filing, a total of 789 Chrysler dealerships, or about 25 percent of its retail showrooms, are slated to close across the country as of June 9.
Richards said the ironic fact is that car sales are up this year by 20 percent at his dealership. "Our sales are up and our warranty work is up," he said, "so that makes it that much harder to accept." He did admit, however, that sales in general have not been nearly as good as they were in the 1980s and early 1990s. "There was a time when we sold 15-25 new cars per month and now we only sell 5-10, and we do sell more used cars than new," he said.
In published reports, Chrysler President Jim Press said, "Shrinking the number of outlets helps ensure profits for those that survive. Stronger dealerships have the resources to in- vest in properties, maintain a uniformly high level of service, and sell more cars." According to the report, Chrysler culled mostly among retailers that had annual sales of 100 or fewer vehicles; sold just one Chrysler brand; or carried inventory from multiple automakers, he said.
According to Richards, Pennsylvania, Ohio and Michigan dealerships were hit the hardest.
For now, Richards said he plans to continue to sell used cars and to service vehicles. Once the dealership has closed, the business will no longer be permitted to do warranty work on the vehicles and instead will have to refer to an existing dealership. He has already cut his workforce by about five in recent months. He currently employs 10, but said it is likely that more cuts will have to be made as the business transitions into a strictly used car sales and service garage.
In the meantime, there are likely bargains to be had as the dealership attempts to sell its inventory of 10 new cars still remaining on the lot. Richards said he wants to sell them locally even if it means selling at cost or below.
Suffice to say, Chrysler's bankruptcy filing has not been good to its dealerships. Dealers who closed businesses prior to the bankruptcy were able to take advantage of some contractual arrangements that benefitted them financially. For example, prior to the bankruptcy announcements, Chrysler would take back new car inventory at invoice price if the vehicles had less than 100 miles on them and no damage. It would buy back all returnable parts, and special tools could be sold back at 100 percent reimbursement when they were one year old and at a gradually reduced rate for older tools.
However, the bankruptcy agreement allows for none of the above, leaving dealerships with their inventory, parts and tools to dispose of on their own. Richards said he currently has about $328,000 worth of vehicles on the lot - $280,000 of that in new cars. He has about $125,000 in returnable parts that he can't return and he has about $17,500 worth of special tools. If the cars are not sold by June 9, Chrysler will pick them up and take them to auction, but the local dealership will take the loss on the difference between the invoice price and the sale price, and Chrysler will charge for the transportation to auction costs. This is why Richards said he would rather sell locally and take the loss than see the cars go to auction to likely be sold at below cost.
If there is any good news in the announcement, Richards said that it has served to remind him of all the loyal customers he has served over the years. He said he has received countless calls and notes from customers telling him how much they will miss his dealership. He said the calls make him feel good and at the same time, he feels bad because he won't be able to do warranty work or continue to sell new cars to them. He also pointed out that the sad part of the warranty work is that customers will have to drive further and pay more for routine service since labor costs are higher in neighboring areas. He said if there is one thing he could say to the community, it would be to urge everyone to "buy local." "Support your local businesses or we won't have them anymore," he said.
Denny concluded by saying that as sad as he feels for his business, he feels sadder for his elderly father. K.G., who sold and serviced new cars in his community for more than 60 years, must now watch the dismantling of that portion of the business he loved so much.
With all the changes going on around the business, one thing remains true. Denny's 1966 Dodge Coronet 500 convertible still languishes front and center in the middle of the dealership's showroom. It's not for sale.