Motor Inn to continue -- minus Chrysler dealership

The auto industry's turmoil is rearing its head in Le Mars.

A local Chrysler auto dealership is one of 789 on a list to be cut in the automaker's bankruptcy dealings.

Motor Inn of Le Mars will no longer sell new Chrysler brand vehicles starting early next month, but the decision won't be final until a judge approves the cuts.

Steve Ohm, general manager/co-owner of Motor Inn, received word Thursday by overnight mail that Chrysler had rejected their dealership agreement in the bankruptcy court filing.

Was he expecting it? No, he said.

"We're going business as usual, and it's going to be with or without Chrysler," he said. "I think we're very fortunate we can continue in operation, and I feel very sorry for those that can't -- the stand-alone Chrysler dealers have nothing to fall back on except the shock."

A letter sent to the 789 dealers stated as of June 9 they must discontinue their Chrysler franchises, which include Jeep and Dodge.

Motor Inn currently sells Chrysler, Jeep and Dodge, along with Dodge trucks.

In addition, news broke today that General Motors plans to trim the number of GM dealerships by 1,100. The company will notify those dealers by phone of by FedEx letters as early as this morning (Friday), according to the Associated Press.

Motor Inn is also a GM dealer, along with Nuebel Chevrolet in Le Mars.

Neither dealership had heard any news from GM as of press time Friday.

In a Chrysler conference call with the media Thursday, Jim Press, vice chairman and president, explained Chrysler's cuts are to "right-size" the company's dealer network.

"The size of the market is substantially smaller than it was before," Press said, pointing out that two years ago the annual selling rate for the industry was at $16 million. This year it's closer to $10.5 million.

Chrysler is restructuring to emerge as a new company, Press said.

"We'll have less production capacity, less sales, in line with demand," he said. "We do not have enough production or sales to keep all of the dealers alive and prosperous and profitable. It isn't because we have too many dealers, it's because we don't have enough industry."

Chrysler currently has 3,200 dealerships.

Chrysler officials looked at a set of measurements and data, applied to all Chrysler dealerships, to decide which would move forward with the company and which would not.

Ohm said he received no specifics on why Chrysler plans to cut the Motor Inn dealership.

"I don't know why," he said. "Maybe it's the proximity to other Dodge dealerships."

The 789 cut add up to 25 percent of Chrysler dealers but only 14 percent of the company's sale volume, according to Steven Landry, Chrysler's executive vice president, North American sales and marketing, global service and parts.

Landry was also a part of Thursday's conference call.

Customers' Chrysler vehicle warranties and service agreements will still be honored after June 9 -- but they will have to go to a dealership Chrysler didn't cut.

"We'd assist them with that, point them in the direction to go," Ohm said.

For Motor Inn of Le Mars, this news isn't the end of the road -- the dealership will continue sell cars, Ohm said.

Motor Inn, which sold Chrysler for more than three decades, also sells GM brands like Buick and Cadillac plus used vehicles.

No jobs will be cut at Motor Inn, Ohm said.

Twenty people are employed at the dealership.

Motor Inn also offers auto servicing and will continue to do so, Ohm said.

"We appreciate people who brought their cars in to get something done, and we hope to continue to take care of them as a service customer," he said.

Motor Inn of Le Mars is part of the Motor Inn family of dealerships -- six businesses around Iowa. The Estherville location was also on Chrysler's "rejected dealerships" list.

Motor Inn was among 22 from Iowa receiving the rejection notices Thursday.

Chrysler won't buy back vehicles from Motor Inn and other cut dealers, but the dealerships won't necessarily be stuck with those they have on their lots.

"We'll work with them to help redistribute their inventory to the dealers that will go forward with the company," Landry said.

He estimated the cut dealerships have a total of 44,000 Chrysler brand vehicles in their inventory, with 90 percent of those being 2009 vehicles.

"We expect to redistribute majority of the '09 vehicles in the next three to four weeks," Landry said.

Press said Chrysler would work with the rejected dealerships' owners in the most "generous" way possible.

"This is a difficult day for us, and not a day that anyone can be prepared for," he said.