In May, Randy Painter and his nine siblings were taken aback to learn their 65-year-old family business -- two Chrysler Group dealerships in Nephi and St. George, Utah -- would be terminated as part of the automaker's restructuring.
The dealerships, opened by their grandfather and father, respectively, were historically profitable and had long been an integral part of their small communities.
Since June, they have struggled to convert their stores into used-car dealerships -- and, like many rejected dealers, they still question the logic behind Chrysler's decision.
"This doesn't happen in the U.S.," said Painter. "It has been a devastating, horrible mistake."
For months, many of the 789 dealers terminated during Chrysler's bankruptcy restructuring have cried foul, saying they were entitled to stay in business despite the automaker's problems.
As Chrysler continues to report dismal sales, industry experts and even a former executive question whether the company blundered by dropping so many dealers and giving them just over three weeks to wind down operations.
Jim Press, who served as Chrysler's president and vice chairman until last month, said in an interview that he personally fought the dealership closings.
"I saw it fraught with terrible issues and short-term sales cost as well as dislocation of customers," Press said. "Dealers are (Chrysler's) only customers, the reason we are in business. How do you eliminate your customer?"Chrysler had been trying to consolidate its dealerships for years by encouraging mergers and acquisitions of neighboring franchises. But "instead of letting natural order take its course, they tried to get it through in 30 days," Press said.
By terminating dealerships, Chrysler could expedite the consolidation of all three of its brands at the remaining stores. Chrysler then could phase out similar vehicles such as the Chrysler Town and Country and Dodge Grand Caravan, which the company said could save it $1.4 billion over four years.
Chrysler has stood by its reduction plan even in light of recent federal legislation that allows rejected dealers to pursue third-party arbitration, with the possibility of being reinstated. Days before Christmas, Chrysler Chief Executive Sergio Marchionne said that reinstating dealerships could "cause havoc within Chrysler," adding that the company may challenge Congress's decision in court.
Bankruptcy filing trumps state lawsFormer Chrysler dealers view the legislation as a milestone in their struggle to get back what they say is rightfully theirs.
Until now, the dealers have had scant opportunity for recourse. Because Chrysler had federal bankruptcy protection, they were unable to exercise their state franchise rights, which would have allowed them to contest Chrysler's decision.
Many have already closed, unlike counterparts at General Motors, which were given longer wind-down periods during that automaker's restructuring and in many cases have continued to sell new cars.
Meanwhile, Annette DiLorenzo Thayer, owner of Quality Jeep Chrysler of Albuquerque, N.M., faces another problem. Although she has remained well-capitalized selling used cars and owns the dealership's property, Chrysler already awarded her Chrysler and Jeep brands to a new dealership across the street that now carries all three nameplates.
Though that dealership has been open only a few months, reversing the transfer may not be permitted under state franchise laws, which once again are applicable since Chrysler exited bankruptcy.
Still, she said, "We are ecstatic to move forward with the arbitration. After months of betrayal, we finally can find out why they did this to us -- why they took our store and gave it to someone else for free."
This article was reported by Emily Maltby for The Wall Street Journal.