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Chrysler Closures Hit 32 Minority-Owned Companies

HispanicBusiness, News Report, Rob Kuznia Posted: May 16, 2009

Chrysler's decision this week to terminate a quarter of all its dealerships did not hit minority-owned companies as hard as initially feared.

But a minority dealership advocacy group is nonetheless upset with the way the company is handling the situation, and has retained a law firm in preparation for a potential legal battle.

Meanwhile, unlike Chrysler, General Motors (NYSE: GM) does not plan to go public with its own list of closures, which will affect about 1,100 dealers by the fourth quarter of 2010.

As for Chrysler, 32 of the 789 doomed dealerships are minority-owned companies. Earlier this week, the president of the National Association of Minority Automobile Dealers told the Wall Street Journal he feared the number would be as high as 140. In all, 161 of Chrysler's 3,200 dealerships are minority-owned; that number will soon decrease to 129.

Although NAMAD officials haven't yet determined the ethnic breakdown of the affected minority-owned dealerships, at least three of them make frequent appearances on Hispanic Business Magazine's annual list of the 500 largest U.S. Hispanic-owned companies. They are Burt Dodge, Chevy, Jeep in Colorado, owned by L.G. Chavez; Greenway Chrysler, Jeep, Dodger in Orlando, owned by Frank Rodriguez; and Signature Jeep in Michigan, owned by Irma Elder.

On Friday, NAMAD President Damon Lester told HispanicBusiness.com that while the number of axed minority-owned companies from Chrysler was lower than expected, he finds the company's entire handling of the situation much more upsetting than GM's approach.

Lester's chief complaint is that Chrysler is giving its terminated dealerships less than one month to prepare, while GM, by contrast, won't shut down dealerships until the fourth quarter of 2010.

"It was definitely more reasonable," he told HispanicBusiness.com of GM's approach. "Chrysler said basically by June 9 you have to be closed. And for what this economy is facing, and high unemployment, it's really not a fair deal for those employees."

Chrysler's public-affairs division could not be reached for comment on Friday.

One of the minority-owned Chrysler dealerships on the termination list belongs to Rudolph Sandoval, who started his Dodge dealership in New Mexico 40 years ago.

On Friday, Sandoval -- an 80-year-old veteran of the Korean War -- told HispanicBusiness.com that he felt betrayed.

"Over a period of 40 years, I have sold 22,000 Dodges," he said. "There's probably room for appeal, but I changed my mind. ... I'm very disappointed with Chrysler."

Sandoval admitted that sales plunged in 2008, by up to 70 percent.

He said he now plans to run a used-car dealership and service station.

"I keep on going," he said. "I have some of those genes that they put on the Energizer battery. When Chuy (Jesus) comes after me, that will be the end."

Among the relieved survivors is Marion Luna Brem, another frequent member of the HB 500 club and a cancer survivor whose story has made national news. (Click here to read a profile.)

On Friday, Brem told HispanicBusiness.com that she and her employees at Love Chrysler dealership in Texas were sick with worry for two weeks before the final word came on Thursday.

Like every one of the 3,200 dealers, Love Chrysler received the news in an old-fashioned way that bore a strange resemblance to the pony express: a letter from the United Parcel Service.

When Brem opened it and learned her company would be spared, "it was a bittersweet feeling."

"I don't recall in recent years ever feeling the level of relief that I felt yesterday," she told HispanicBusiness.com Friday. But she added: "While I'm feeling relief, I have a number of peers and friends who did not receive this letter. They received another letter. My thoughts and prayers are with all of them, and certainly my empathy. I know the magnitude of their loss."

Brem said she is feeling optimistic about the future, and excited about Chrysler's partnership with Italy-based Fiat.

"They are made beautifully, and are fuel efficient -- and you still don't lose the sexiness of the vehicle," she said. "It is exactly what the market is calling for right now."

Brem said the experience of nearly losing her business was comparable in some ways to her battles with cancer, which she conquered.

"I'm a business owner, and as a Latina, I've never known how to not take business personal. ... The rejection would have been hard not to personalize."

Meanwhile, NAMAD issued a press release Friday stating that it had retained the law firm of Harris Beach "to protect the interests of minority dealers throughout the country."

The organization did not make clear if it plans to file a lawsuit.

"We are seeking reasonable and just compensation and reasonable representation among the dealer ranks based on past promises and programs," Lester said in a statement.

Related Articles:

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Will Small Businesses Cash in on Stimulus Dollars?

Minority Small Businesses Key to Economy

Congressional Dems Probe the State of Minority Owned Business

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