Chrysler Dealer Says He Was Axed for Not Buying Cars (Update1)

Chrysler LLC pressured dealers to buy cars in the months before filing for bankruptcy and a Florida dealer claims it is losing the franchise because it refused, according to court documents.

Jim Boast Dodge Inc. of Bradenton, Florida, asked a New York judge in a May 23 filing to block Chrysler’s attempt to terminate its franchise agreement with the dealership, saying the automaker is breaking Florida law and doesn’t have a reasonable business case for the decision.

Between January and March, Chrysler urged U.S. dealers to buy extra cars to convince the U.S. government of the company’s viability and avoid bankruptcy, Boast said in the filing. On May 14, Chrysler asked the judge to cancel 789 car dealership agreements, including Jim Boast’s, who said the dealership bought four vehicles instead of the 60 it was expected to order.

Chrysler executives threatened dealers who didn’t buy enough cars in a Feb. 13 conference call, saying they would “never forget that those dealers did not help the company when it desperately needed help,” Boast said in the filing.

“It will be worth finding out,” the dealer said in court papers, “how many other dealers who failed to adhere to the debtor’s threats have now found themselves on the chopping block.”

Chrysler won’t comment on specific allegations made by dealers because the issues will be dealt with by the judge, spokesman Fred Spar said in a telephone interview.

Reducing Network

The company rejected contracts with about 25 percent of its dealers, who accounted for about 14 percent of sales, Spar said.

“It’s unfortunate,” he said. Chrysler must reduce its dealers network to win approval of a plan to sell its assets to a new company it will form with Italian automaker Fiat, “or else we would have to liquidate all 3,200 dealerships,” he said.

The automaker filed for Chapter 11 bankruptcy April 30 after a group of 20 secured lenders rejected an offer by the U.S. government that would have paid them $2.25 billion for $6.9 billion of debt, or 33 cents on the dollar. Chrysler’s 22 U.S. factories with about 26,800 hourly workers were idled May 1.

Chrysler, in its April 30 filings, listed assets of $39.3 billion and liabilities of $55.2 billion, making it the fifth- largest bankruptcy in U.S. history, according to data compiled by Bloomberg News.

Family Business

The Boast family has been a Dodge dealer for almost 70 years, James Keedy, president of Jim Boast Dodge, said in a court filing.

“In light of the fact Bob Boast Dodge has been performing at very good sales levels, I do not believe the termination of Bob Boast Dodge is performance based,” Keedy said. The contract was terminated because the dealer would “not succumb to the recent threats and extortionist behavior” of Chrysler executives, he said in the filing. The dealer is also known as Bob Boast Dodge.

A group of 300 Chrysler dealers has also sought to delay the sale of the automaker’s assets, saying they need more time to fight the cancellation of their franchise agreements.

A hearing is scheduled June 3 in New York.

The case is In re Chrysler LLC, 09-50002, U.S. Bankruptcy Court, Southern District of New York (Manhattan)