Both Chrysler and General Motors have announced that they are effectively closing a total of nearly 2,000 dealerships across the country by not renewing their franchising contracts.
Chrysler announced that it will terminate 798 franchise agreements across the U.S. this month, affecting approximately four million customers who bought or serviced their cars. And GM has announced that they will not renew agreements with 1,100 U.S. dealers.
“Locally, Chrysler and GM customers will be affected by dealer closings and it’s important to minimize confusion,” said Norman Wright, president and CEO of your Better Business Bureau serving northwest Florida. “Owners might have to drive farther to get service and may face larger issues such as getting stuck with payments for a vehicle they traded in.”
In light of the announcements, your BBB answers common questions about dealer closings:
How did Chrysler and GM decide which dealers to close?Chrysler and GM indicated their decisions were based on customer satisfaction, sales performance and market over saturation. Yet in comparison, Chrysler and GM will still have a large number of dealers. By 2010, Chrysler will have 2,411 dealers and GM aims to have 3,600, compared to the current 1,304 Honda dealers and 1,470 Toyota dealers in the U.S.
When will the affected dealers close their doors?The affected Chrysler dealers will not have their franchise agreements renewed effective June 9, 2009. To date, 1,100 GM dealers have received letters notifying them that GM will not renew their agreement and most of those will see their contract expire in October 2010.
Where can I find out which dealers are closing?Chrysler has made their list of dealer closings public, available on the Wall Street Journal’s Web site: http://graphicsweb.wsj.com/php/CARDEALERS0905.html
GM hasn’t released an official list yet but some dealers have already received the bad news.
Will my warranty or extended warranty be affected?A warranty or extended warranty is offered by the automaker, not the dealer. Both Chrysler and GM have indicated that they are committed to honoring their manufacturer’s warranty despite declaring bankruptcy. Extended auto warranties are backed by a separate company which is affiliated with, but not financially tied to, the company manufacturing the vehicles.
How will I know where to take my car for service?Both Chrysler and GM warranties will be honored by any respective certified dealer.
What if the dealer closes its doors without paying off the loan on my trade-in?While a dealer is supposed to pay off the loan on a vehicle they accept for a trade-in, they might not if they go out of business. If this happens, the original owner could still be liable for making payments or the lender could go after the person who bought the used car from the dealer. While rare, it can happen. Some states have created funds to reimburse victims.
For additional advice you can trust from BBB about buying and owning a vehicle, and for auto warranty dispute information from the BBB AUTO LINE program, start with bbb.org.
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