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Bitter? Why bother, says a reinstated Chrysler dealer

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Bitter? Why bother, says a reinstated Chrysler dealer

Bradford Wernle

Automotive News -- April 12, 2010 - 12:01 am ET

Harold Johnson, CEO of Steven Automotive Group in Wichita, Kan., could be bitter toward Chrysler Group. After all, the company rejected Steven Chrysler-Jeep-Dodge nearly a year ago during the automaker's bankruptcy, forcing the store to cut jobs.

But the soft-spoken, even-tempered Johnson isn't the type to harbor grudges. Instead, he and partner Mike Steven already have signed Chrysler's reinstatement offer.

"Sure, we've got a little heartburn because we lost it," Johnson said, "but what can you do? You can't turn back the clock. You have to make the most of the situation that's out there right now. We're really excited about it."

Johnson, 55, hopes to get the dealership back up and running before the summer selling season kicks in.

Long to-do list

He is working on a lengthy to-do list. Since the store stopped selling new Chrysler vehicles last June 9, Steven Automotive has been operating the dealership as a used-car and service business. Last month Chrysler sent reinstatement offers to 50 dealerships, including Steven Automotive's Chrysler-Jeep-Dodge store.

The dealership reduced its work force to 20 from 50 after it stopped selling new vehicles. Some employees have gone to work at Steven Automotive Group's other stores in Wichita. The group also sells Toyota, Scion, Infiniti, Volkswagen, Mitsubishi and Kia. Saying goodbye to some employees was one of the most painful parts of the Chrysler rejection. The reinstatement offers a chance to heal.

"That's going to be the fun part, getting the employees and being able to offer jobs again," Johnson says.

To resume selling new Chrysler Group vehicles, Johnson and Steven need to spend an undetermined amount to get the store up to Chrysler's standards. Johnson says the dealership already meets the company's requirements for square footage.

Johnson says they're also shopping for a floorplan provider.

"We have a used-car floorplan at the existing location, which we could utilize for new cars," he says. "But we will definitely explore some of the captives to see if they want to provide new-car floorplanning."

Letter was a shock

When Chrysler's rejection letter arrived last May, it was a bitter shock for Steven Automotive. That's because the dealership group, by 2005, had spent about $6 million putting Chrysler, Dodge and Jeep under one roof at the automaker's behest, Johnson says.

In 2008, the dealership sold about 35 to 45 new vehicles per month.

The rejection "hurt us financially, mentally and emotionally," Johnson says. "Now's our chance to recover financially -- and hopefully mentally and emotionally, too."

A clause in the reinstatement offer prohibits Steven Automotive from protesting if Chrysler appoints another dealer in the dealership's territory within five years. Although the topic didn't come up in conversations with officials from Chrysler's Denver business center, the cordial tone of those talks reassured Johnson.

"We do not believe this is any type of mechanism whereby Chrysler Group would ask a dealer to sign a document, then turn around and not act in good faith," he says. "We believe we've got a real deal going on here."

Another challenge: Getting customers to return.

"There were some people who felt bad we lost the dealership," Johnson says.

"Whether they were upset enough not to purchase a Chrysler vehicle, I don't know. Hopefully, now coming out of bankruptcy and with new product starting to show up, they'll be happy we're back."

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