Darner dealership on Chrysler closure list - East Valley Tribune: News

Darner dealership on Chrysler closure list

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Posted: Thursday, May 14, 2009 10:10 am | Updated: 2:28 am, Sat Oct 8, 2011.

Darner Motor Sales in Mesa is one of four dealerships in Arizona that Chrysler Corp. intends to close, according to a plan filed in bankruptcy court Thursday.

Chrysler targets 800 dealers in reorganization

Darner Motor Sales in Mesa is one of four dealerships in Arizona that Chrysler Corp. intends to close, according to a plan filed in bankruptcy court Thursday.

Chrysler targets 800 dealers in reorganization

Owner Joel Darner II confirmed Thursday morning he had received notice the automaker plans to terminate its franchise agreement with his dealership, which is located at 837 E. Main St.

Darner said he was disappointed with the decision and surprised at the rush to implement the plan. The company said in its filing that it wants the dealers closed by early next month.

If the Chrysler franchise is lost, Darner said he might have to cut 20 to 25 jobs.

But he said Darner will stay in business selling used vehicles and servicing all brands. The company will remain at its Main Street location and could reopen a second location at 1225 N. Arizona Ave. in Gilbert, which the company closed two months ago, he said.

"It's sad they are trying to rush things so fast, but Darner Motor Sales will still be here," he said. "We sell more used cars than new cars anyway."

Darner said that he and several other Chrysler dealers will try to at least lengthen the close-down process to make it more orderly. He said the dealers want more time to sell off their inventory of new vehicles and parts to the public. The automaker doesn't intend to buy the inventory back, he said.

"I just think the small business owner needs some time (to wind down the business)," he said.

The Chrysler Corp. reorganization plan calls for closing 789 dealerships nationwide, or roughly 25 percent of the current number.

Other Arizona Chrysler/Dodge/Jeep dealers targeted for closing are Arnold Motor Sales in Superior, Brothers Motors in Flagstaff and Performance Dodge in Phoenix.

Many of the dealers' sales are too low, the automaker said. Just over 50 percent of dealers account for about 90 percent of the company's U.S. sales, the court motion said.

In addition to lost jobs, the closings are expected to result in lost sales tax revenue for cities.

A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York to determine whether to approve Chrysler's motion.

Chrysler dealerships aren't the only ones scheduled to get bad news this week. General Motors Corp. says it is notifying 1,100 dealers that it will not renew their franchise agreements when they expire at the end of September 2010.

The roots of Darner Motor Sales date back to 1939 when Joel Darner Sr. opened a used car business in Phoenix. He moved to Mesa in the late 1940s, setting up a Hudson dealership on South Country Club Drive. Later the company secured a DeSoto/Plymouth dealership and in 1953 became a Chrysler dealer. The business moved to its current Main Street location in 1966, Darner said.

Darner said his business may have been targeted because it sells only two of the three Chrysler brands. In its motion, Chrysler said it would favor dealers that sold all of the Chrysler/Jeep/Dodge brands, so that different dealers did not compete against one another. Darner sells the Chrysler and Jeep brands.

Also Chrysler said that many of the dealers were no longer in the best or growing locations and that many of the rural locations serve diminishing populations.

Chrysler also said its dealers are not competitive enough with foreign brands. Chrysler sold an average of 303 vehicles per dealer in 2008, according to the filing. By contrast, Honda Motor Co. sold about 1,200 vehicles per dealer, while Toyota Motor Corp. sold nearly 1,300 per dealer.

Chrysler said its dealer network "needs to be reduced and reconfigured in a targeted manner to strengthen the network and dealer profitability and to achieve optimal results for the dealers and consumers."

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.

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