May 1, 2009 at 1:00 am

Dealerships put hope in warranties

Government backing may help push sales, dealers say

Lochmoor Chrysler Jeep salesman Fred Brans gives the keys to a new Jeep to Sharon Przepiora. (David Coates / The Detroit News)

With the bankrupt Chrysler name emblazoned on his Houston dealership, Alan Helfman knows it won't be as easy to sell cars and trucks. But, he thinks the right incentives -- and the $280 million backing of the U.S. government for vehicle warranties -- will keep buyers coming in.

"It's a backup as a good as a treasury bond," said Helfman, vice president of River Oaks Chrysler-Jeep, one of Texas' largest Chrysler dealerships. "If anyone has any trepidation about buying, these programs should let them know there's no need to worry."

At least that's what Helfman and thousands of other Chrysler dealers around the country hope.

Chrysler's plunge into bankruptcy brings yet another ruffle to dealers' struggling to sell cars amid a recession punctuated by the industry's months-long public struggle for survival.

Forty-five Chrysler dealers went out of business last week, company vice chairman Jim Press said, and the consolidation isn't over.

"It won't be a catastrophic number," Press said of the closures, but "there will be a noticeable reduction in the number of dealers going forward."

For the 3,300 left, there won't be an easy sell, experts say.

After months of speculation about Chrysler's future, much of the worry associated with buying a vehicle from a bankrupt company already has scared away the most nervous customers, said Jack Nerad, an industry analyst for Kelley Blue Book.

"But, at the same time, this clarifies the situation about the company's future," Nerad said. "It's pretty clear the federal government would like Chrysler to continue operations, and will see to that happening."

Chairman Robert Nardelli on Thursday offered assurances Chrysler will back purchases.

"Chrysler and our dealers will continue to sell and service all vehicles and honor warranties," Nardelli said in a memo to employees. "We will continue to supply parts to our dealers to ensure that vehicles can be serviced without delay."

Philip Reed, senior consumer advice editor at, said deals on Chrysler, Dodge and Jeep vehicles are likely to be aggressive, but not as much as consumers might expect.

"There will be deals, but more in the realm of very competitive pricing and incentives rather than 'fire sale' prices," Reed said.

Chrysler's most recent round of incentives, including the Employee Pricing Plus program, were set to expire Thursday, but the company is expected to unleash a new round of bargains for this month beginning today.

Nerad, the Kelley Blue Book analyst, said it's unlikely those incentives will be much more aggressive than in previous months.

"The buyers who wouldn't buy because of bankruptcy are unlikely to be lured in by extra incentives," Nerad said.

Dealers are pinning their hopes on the government warranty guarantee program, which seasoned salesmen like Gus Russo, the 68-year-old owner of Lochmoor Chrysler in Detroit, said is helping move vehicles. As news about the bankruptcy unfolded on TV screens in his dealership on Mack, Russo sold a 2009 Jeep Grand Cherokee.

Other dealers said a clear game plan can only help.

"I'm excited that we're going to be able to come out of this in a much better position," said Chuck Fortinberry, owner of Clarkston Chrysler Jeep. "We're no longer foundering in an unknown territory."

Candice Williams and Alisa Priddle contributed.

Lochmoor Chrysler Jeep owner Gus Russo and his daughter, Gina Marie, watch ...