Chrysler will cut ties to 10 suburban dealerships

Ten suburban car dealerships received notice Thursday that their Chrysler franchise is being revoked, a move that will force the local businesses to restructure or possibly close.

According to the Chrysler LLC bankruptcy court filing, the car company is dropping 789 of its 3,200 Chrysler retail dealerships nationwide - roughly one our of every four. That total includes 44 in Illinois.

Similar action is expected next week from General Motors Corp., which plans to drop one-third of its 6,200 retail dealerships nationwide.

General managers at suburban Chrysler dealers were reluctant to say much Thursday as they attempted to figure out the next step. Some of the dealers say they will stay open even without the Chrysler brands.

At Bill Kay's Naperville Chrysler, for example, one of the dropped dealers, it will be business as usual minus the new Chrysler cars, the employees said. The dealership sells mostly used cars, and Bill Kay's other Chicago-area locations carry a variety of car brands besides Chrysler, which they will continue to sell.

That's also the case at Gregory Chrysler Jeep in Lake Villa, another franchise cut by Chrysler. Manager Jeff Schweinert said Thursday that they have no plan to call it quits.

"They can take the Chrysler product away and take their sign down. We'll continue to sell used cars," he said. "We'll keep working. We have to feed our families."

Some of the suburban dealers listed on the bankruptcy filing were:

•Arlington Chrysler Jeep Dodge, Buffalo Grove

•Bill Kay Naperville Chrysler, Naperville

•Bill Kay Chrysler, Downers Grove

•Ed Napelton Dodge, Westmont

•Extreme Jeep, McHenry

•Gregory Chrysler Jeep, Lake Villa

•Naperville Dodge, Lisle

•Richard Chrysler Jeep Dodge, St. Charles

•Viking Dodge, Crystal Lake

•Westside Dodge, North Aurora

Dealers were told Thursday morning through United Parcel Service letters if they were targeted. Chrysler spokeswoman Kathy Graham would not comment other to say the company will notify dealers before speaking publicly. A hearing is scheduled for June 3 in U.S. Bankruptcy Court in New York to determine whether to approve Chrysler's motion.

The third-largest U.S. carmaker filed for bankruptcy protection April 30 after failing to win concessions from creditors. In court filings, Chrysler said 50 percent of its dealers account for about 90 percent of its vehicle sales.

Meanwhile, GM is expected to notify its dealers within the next week if they will continue to receive new cars and trucks from the company. GM plans to close 2,600 of its 6,246 U.S. dealers.

Industry experts say carmakers have been handicapped by their large dealer networks, which have fostered price battles among those serving the same market.

Jed Jordan, vice president of Zeigler Chrysler, Dodge, Jeep, Sprinter in Schaumburg, one of the dealerships spared the ax, said they're trying to roll with the changes in the industry.

"As Chrysler's situation changes we'll change with it and we'll adapt. And as we get news of product changes, or location changes, or things that they need us to do, we'll be in communication with them," Jordan said.

The combination of revoked Chrysler and GM franchises could ultimately be a fatal blow to some local dealerships, and that, in turn, would be detrimental to local communities that rely on sales tax dollars from auto sales.

While local municipalities said they are prohibited from divulging specific sales tax receipts from individual businesses, they all rely on them as a significant revenue source.

St. Charles City Administrator Brian Townsend said Richard Chrysler Jeep Dodge was one of the city's top 20 sales tax generators in 2006 and 2007, but slipped out of the top 20 in 2008.

If the dealership were to ultimately close, "the loss would be extremely detrimental," Richards said.

North Aurora Finance Director Bill Hannah said it "would be reasonable to say" that Westside Dodge and Riverfront Chrysler-Jeep, both located in the North Aurora Auto Mall, generate about $100,000 to $150,000 a year for the village.

The mall lost Saturn of North Aurora in January.

Naperville averages about $400,000 per dealership in sales tax revenues annually, though it's probably less this year due to the recession, city officials said.

Staff Writers Susan Sarkauskas, Melissa Jenco, Jim Fuller, Joe Lewnard and The Associated Press contributed to this report.

<div class="infoBox"> <h1>More Coverage</h1> <div class="infoBoxContent"> <div class="infoArea"> <h2>Related documents</h2> <ul class="morePdf"> <li><a href="/pdf/chryslerclosings.pdf">Full list of affected dealerships</a></li> </ul> <h2>Video</h2> <ul class="video"> <li><a href="javascript:void(window.open('http://video.ap.org/?t=By%20Section/Money&g=0514dv_chrysler_dealerships&f=ILARL','_blank','width=788,height=598,status=1,scrollbars=1,resizable=1'));">Chrysler moves to cut dealerships</a></li> </ul> </div> </div> </div>