The seven dealerships targeted by Chrysler, including Spitzer Autoworld Sheffield, are sitting on nearly $15 million in unsold new car inventory, said Anthony Giardini, Spitzer`s attorney.
That inventory will plummet in value if Chrysler gets its way because the automaker will no longer back the 100,000-mile warranty on the cars and will effectively force Spitzer to sell them as used cars for about half the price, Giardini said.
“You don`t have to be a car guy to understand that $15 million in inventory becomes $7 million in inventory,” he said.
According to court documents filed by Giardini before U.S. Bankruptcy Judge Arthur Gonzalez, Spitzer`s Sheffield location has $1.5 million in new cars that will be worth $750,000 after June 9, when the company would lose the right to sell the cars as a Chrysler franchise.
The court documents also point out that Spitzer built its new, state-of-the-art facility in Sheffield at a cost of $3.5 million to Chrysler`s specifications. The company also spent $1.1 million purchasing and closing down Abraham Dodge in Lorain at Chrysler`s request, effectively consolidating the Dodge dealership and Spitzer Motors of Elyria, which also closed, at the Sheffield store.
The franchise that Spitzer built will go to Ed Tomko Chrysler-Jeep in Avon Lake, which Giardini said is not nearly as well-positioned to sell cars.
Spitzer took the largest hit earlier this month when Chrysler announced the 789 dealerships it would part ways with under its restructuring plan, Giardini said. Spitzer`s loss of seven dealerships, including five in the Greater Cleveland area, one in Columbus and one in Florida, tied with the number of dealerships lost by AutoNation, the country`s largest car dealership company.
Nick Abraham also lost his right to sell Chryslers and Jeeps at the Abraham Auto Mall in Elyria and, like Spitzer, is challenging Chrysler`s decision to end their long-standing relationship.
Giardini said dealers` objections will be dealt with in a hearing set for June 3 before Gonzalez. He said he didn`t know if Spitzer will be allowed to make its case.
He said it`s more likely that the dealers who have formed the Committee of Chrysler Affected Dealers, of which Abraham is a member, will likely make the case because it represents hundreds of dealerships around the nation.
Spitzer President Alan Spitzer said in a letter to customers on his company`s Web site that he doesn`t plan to close down any of the dealerships targeted by Chrysler. He said all of the company`s 29 dealerships will remain open and urged customers to contact President Barack Obama and members of Congress to urge them to reject Chrysler`s decision.
But in the court filings, Giardini warned that more than 1,000 Spitzer workers could lose their jobs if Chrysler is allowed to move ahead with its plans.
It will be “putting a 105-year-old, profitable enterprise at risk of going out of business,” Giardini wrote.
No Lorain County dealerships were affected by General Motors` decision to end its relationship with 1,100 dealers around the country. General Motors also is close to bankruptcy as it struggles to cut costs amid the recession and slumping auto sales.