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AMC Dealers Happy With Chrysler Deal : Loyal Troops in State Hope Value of Outlets Will Increase Greatly

March 11, 1987|JUBE SHIVER Jr. | Times Staff Writer

Buoyed by prospects that their dealerships may increase in value as a result of Chrysler's decision to buy American Motors Corp., many of California's 100 AMC dealers on Tuesday were jubilant that their years of work and loyalty to AMC might finally pay off.

"I have no mixed emotions about the Chrysler deal," said John Walker, president of Walker Bros. AMC Jeep and Renault, which after selling cars in Los Angeles for 62 years is one of the oldest AMC dealers in the country. "I feel it can do nothing but help."

Just what Chrysler and Chairman Lee A. Iacocca may have in mind for AMC and its dealers was not clear Tuesday, the day after Chrysler's surprise $757-million proposal to buy the long-troubled auto maker.

However, in a prepared statement issued Monday, Iacocca stated that "the AMC-Jeep-Renault dealer organization will remain independent." And many California AMC dealers were predicting that the values of their dealerships would rise dramatically.

Chrysler has already reached agreement to buy Renault's 46.1% share of AMC and proposes to buy the remainder of AMC for $4 a share, payable in Chrysler stock. The AMC board is scheduled to meet this morning to consider Chrysler's proposal, but final action on the offer is not expected immediately. AMC has also not told its dealers what they might expect from the proposal.

On Wall Street, AMC stock was the most active issue on the New York Stock Exchange with 15 million shares traded. The price was unchanged at $4.25 a share. Chrysler was the 11th-most active stock, closing up 87.5 cents to $54.75.

"I think potentially this deal could probably double the value of our dealership," said Lars Bjorkqvist, general partner and manager of San Diego AMC Jeep Renault and Saab Co.

"I think someone who maybe wants to expand his dealership portfolio may look at the AMC dealership as a good investment in anticipation of new products coming down the road and more financial backing from Chrysler," added Chris Cedergren, an analyst at J. D. Power & Associates automotive consulting firm in Westlake Village.

Other experts, noting that car dealerships tend to stay in the same ownership hands, said that while the value of some dealerships may rise, they did not expect a bull market for dealers who want to sell out to new owners.

"There's always value attached to a hot-moving property, but automobile dealerships tend to stay in families for a long period of time," said Gary Frazier, an associate professor of marketing at the University of Southern California. "There's not that much buying and selling."

AMC's 1,200 domestic dealers have been among the most embattled participants in AMC's two-decade-long slide into an automotive also-ran. Dealers said they have a number of complaints. For instance, Walker said, "It takes forever to get your money from AMC. Chrysler pays their bills on time."

Besides slow bill paying, dealers say their relationship with AMC has been marked by a disappointing nine-year partnership with France's Renault and lackluster AMC offerings such as the ill-named Gremlin and the short-lived Marlin, which lasted less than 24 months before production was canceled in 1967.

To be sure, there have been bright spots--especially the hot-selling AMC Rambler car in the late 1950s and early 1960s and, more recently, the venerable Jeep in the 1970s and 1980s.

However, AMC dealers say showroom traffic has been adversely affected as increased stiffer competition from imports and domestic car makers has siphoned buyers away.

Although most dealers were optimistic on Tuesday that their fortunes would improve under Chrysler, some dealers and analysts worried that the combination could confuse consumers in the short term and hurt dealers if Chrysler dealers and AMC dealers are allowed to sell each other's products.

Frazier said publicity about the deal might create confusion.

"I think from a consumer's point of view it may get very confusing," said Frazier. "They are going to wonder 'what am I really buying? Can I get it serviced and will it (AMC cars) still have the same parts?'

"The Jeep is such a standard product that I think people interested in the Jeep are not going to be alarmed at all," Frazier said. "But the other brands that AMC sells--that's where it's more critical."

Noting that he has a Dodge dealer across the street from his AMC showrooms and a Chrysler dealer three blocks away, Wayne George, secretary-treasurer of Glendale AMC Jeep Renault said, "My concern is what is going to happen to the future marketing plans for Jeep. We wouldn't want to be selling just the Jeep while the Dodge dealer across the street and Chrysler dealers can sell them too."

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